Asked by Alfred Lopez on Jun 04, 2024
Verified
Factoring involves the sale of accounts receivable by the firm that originally generated the receivables.
Factoring
Factoring is a financial transaction where a business sells its accounts receivable to a third party (the factor) at a discount, to raise immediate capital.
Accounts Receivable
Money owed to a company by its customers for products or services delivered but not yet paid for.
- Become knowledgeable about the different short-term funding alternatives and their distinctive traits.
Verified Answer
ZK
Zybrea KnightJun 07, 2024
Final Answer :
True
Explanation :
Factoring is a financing method used by companies to convert their accounts receivable into cash by selling them to a third party at a discount. This is done to improve cash flow and reduce the risk of bad debt.
Learning Objectives
- Become knowledgeable about the different short-term funding alternatives and their distinctive traits.
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