The selling of accounts receivable as a means of quickly raising cash, minimising debt collecting expenses and minimising bad debt losses is known as:

Question

Quizplus · Accepted Answer

Factoring is the practice of selling accounts receivable to a third party or a specialised financial institution, known as a factor, at a discount in order to quickly raise cash and minimise debt collecting expenses and bad debt losses. Ageing refers to the process of analysing accounts receivable to determine their age and the length of time they have been outstanding. Diverting and transferring are not specific terms related to accounts receivable management.

The Selling of Accounts Receivable as a Means of Quickly