Factoring Is an Option Available to a Business to Reduce

question 193

True/False

Factoring is an option available to a business to reduce the risk of uncollectible accounts receivable.

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Definitions:

Receivable from Factor

Funds to be received from a factor, a financial intermediary that purchases receivables from a company, providing it with immediate cash.

Factoring Expense

Costs associated with the process of selling accounts receivable to a third party to obtain immediate cash.

Financing Agreement

A legal contract between a borrower and a lender, outlining the terms for borrowing funds, including the interest rate, repayment schedule, and other conditions.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services that have been delivered but not yet paid for.