Factoring is a form of short-term financing which involves [blank].
A)actually selling accounts receivable to a financial institution at a discount from face value
B)pledging accounts receivable as collateral for a short-term loan
C)using a percentage of current assets as collateral for a short-term loan
D)selling inventory to a factor with an agreement to repurchase it at a set time in the future

Question

Quizplus · Accepted Answer

Factoring involves selling accounts receivable to a financial institution at a discount from face value, which provides immediate cash flow for the business. The financial institution, or factor, then collects on the accounts receivable directly from the customers.

Factoring Is a Form of Short-Term Financing Which Involves [Blank]