In which scenario can firms achieve their objective by developing a relationship with a firm that offers factoring services?
A)the firm has established a source of long-term financing that avoids fees and commissions
B)the firm plans to issue large sums of commercial paper in the near future
C)the firm has larger than necessary cash balances and wants to find a safe way to invest the excess cash
D)the firm relies heavily on credit sales and wants to speed up the receipt of cash

Question

Quizplus · Accepted Answer

Factoring services provide immediate cash flow by purchasing a firm's accounts receivable at a discount, thereby accelerating the receipt of cash from credit sales. This can benefit a firm that relies heavily on credit sales and needs to improve cash flow.

In Which Scenario Can Firms Achieve Their Objective by Developing