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Assigned Account

A type of secured transaction whereby an account receivable is pledged to a bank, factor, or other lender to secure the repayment of a loan.

It is common commercial practice for a manufacturer or wholesaler to sell inventory on open account, a debt owed to the seller of inventory that is to be repaid by its buyer as the merchandise is sold. This arrangement creates an account receivable that the seller uses as collateral for a loan.

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