Asked by Rounak Munoyat on Apr 26, 2024
Verified
Factoring makes it possible for a loan to be increased as sales and receivables grow.
Factoring
A financial transaction where a business sells its accounts receivable to a third party at a discount to raise immediate capital.
- Learn about the theory and economic impact of factoring, focusing on its role in cash flow and oversight of credit.
Verified Answer
SI
soroor iraniMay 03, 2024
Final Answer :
True
Explanation :
Factoring is a type of financing that involves selling accounts receivable (i.e. outstanding invoices) to a third-party financial institution (i.e. a factor) at a discount in exchange for immediate cash. As sales and receivables increase, the amount of cash available through factoring also increases, allowing for the possibility of an increased loan amount.
Learning Objectives
- Learn about the theory and economic impact of factoring, focusing on its role in cash flow and oversight of credit.