Which of the following is NOT a characteristic of factoring accounts receivable?

A) A firm sells its accounts receivable to a finance company.
B) Receivables are sold without recourse.
C) The firm incurs any losses from nonpayment.
D) Maturity factoring and advance factoring are the two basic ways of financing.

Factoring Accounts Receivable

A financial transaction whereby a business sells its accounts receivable to a third party at a discount in exchange for immediate cash.

Without Recourse

A financial term indicating that the seller of an asset is not liable if the underlying assets fail to perform as expected.

Maturity Factoring

A form of financing where a business sells its invoices to a factor at a discount for immediate cash, with the collection of funds from customers handled by the factor upon maturity.