Accounts receivable financing might include
A) pledging receivables and factoring.
B) loaning money against receivables and aging accounts receivable.
C) providing cash discounts and charging interest on delinquent accounts.
D) aging accounts receivable and using the most effective methods for collecting overdue accounts.

Question

Quizplus · Accepted Answer

Accounts receivable financing typically involves two main methods: pledging receivables as collateral for a loan (loaning money against receivables) and factoring, which involves selling receivables at a discount. Therefore, option A is the best choice as it includes both of these methods. Option B refers only to loaning money against receivables and aging accounts receivable, and option C refers to providing cash discounts and charging interest on delinquent accounts, which are not necessarily methods of financing accounts receivable. Option D refers to aging accounts receivable and collecting overdue accounts, which are important steps in managing accounts receivable but not necessarily methods of financing them.

Accounts Receivable Financing Might Include