An entrepreneur needs cash in a hurry and sells her accounts receivable to a firm for fee.This is an example of factoring.

Question

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Factoring is the process of selling accounts receivable for immediate cash to a third-party financial company or factor. It is often used by entrepreneurs who need to quickly access cash and do not want to wait for their customers to pay their outstanding invoices. In exchange for a fee or discount, the factor pays the entrepreneur a percentage of the total receivables amount and assumes responsibility for collecting payment from the customers.

An Entrepreneur Needs Cash in a Hurry and Sells Her