The accounts receivable and inventory of a firm typically are used as collateral when issuing short-term secured financing.

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Accounts receivable and inventory are two commonly used types of collateral for short-term secured financing. Lenders may require a borrower to pledge these assets as security to ensure that there is a way to recover their funds in the event of default or non-payment.

The Accounts Receivable and Inventory of a Firm Typically Are