Which of the following statements is true about factoring without recourse?
A)The seller of the receivables is liable upon default of the debtor.
B)The factor's risk is lower than if the factoring were with recourse.
C)An example is the use of major credit cards.
D)The fee will be lower than if the factoring were with recourse.

Question

Quizplus · Accepted Answer

Factoring without recourse means that the factor (the buyer of the receivables) assumes the risk of non-payment by the debtor. When consumers use major credit cards, the merchant receives payment from the credit card company without bearing the risk of default by the cardholder, which is an example of factoring without recourse.

Which of the Following Statements Is True About Factoring Without