Pledges of accounts receivable are normally made on a notification basis because the lender does not trust the borrower to collect the pledged account receivable and remit these payments as they are received.

Question

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Pledges of accounts receivable are typically made on a non-notification basis, meaning the borrower continues to collect the receivables without notifying the customers, as the lender trusts the borrower to remit the payments.

Pledges of Accounts Receivable Are Normally Made on a Notification