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Assignment Basis

Assignment Basis

In the normal course of business, customers are constantly making purchases on credit and remitting payments.  Transferring receivables to another party allow companies to reduce the sales of cash revenue cycle time.  Also known as pledging, assignment of accounts receivable is one of two ways companies dispose of receivables, the

other being factoring. The assignment process involves an agreement with a lending institution and the creation of a promissory note that pledges a portion of the company’s accounts receivable as collateral on the loan.  If the company does not fulfill its obligation under the agreement, the lender has a right to collect the receivables. There are two ways this can be accomplished:

General Assignment:  a portion of, or all, receivables owned by the company are pledged as collateral.  The only transaction recorded by the company is a credit to cash and a debit to notes payable.  If material, the terms of the agreement should also appear in the notes to the company’s financial statements. Specific Assignment:  the lender and borrower enter into an agreement that identifies specific accounts to be used as collateral.

The two parties will also outline who will attempt to collect the receivable, and whether or not the debtor will be notified. In the case of specific assignment, if the company and lender agree the lending institution will collect the receivables, the debtor will be instructed to remit payment directly to the lender. Though working on assignment basis sounds like a one-time thing, it helps in overall research work and hence, increasing more knowledge and improving focus. 

You get a chance to impress the employer and this can lead to an offer to be brought on board full-time as a regular employee Since you are being paid as a “contractor” instead of as a regular staffer, you may be eligible to deduct a portion of your work-related expenses that you wouldn’t normally qualify for You have an opportunity to sample a number of employers by taking on a series of different contracts in a variety of industries  What matters most in a contract position is the results that you produce for the employer. Thus you may find yourself not needing to get as involved in workplace politics  Feel free to contact us to know more about this service.

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