Consider an exporter that ships products to an importer on credit. The exporter needs funds immediately, so it obtains a loan from a bank using the account receivable as collateral. This reflects:

Question

​Consider an exporter that ships products to an importer on credit. The exporter needs funds immediately, so it obtains a loan from a bank using the account receivable as collateral. This reflects:

Quizplus · Accepted Answer

Accounts receivable financing involves obtaining a loan using accounts receivable as collateral, which is exactly what the exporter in this scenario is doing. Forfaiting involves the sale of a future payment stream, and factoring involves the sale of accounts receivable to a factoring company. A letter of credit is a payment guarantee that is typically issued by a bank to secure payment for the exporter.

​Consider an Exporter That Ships Products to an Importer on Credit

Consider an Exporter That Ships Products to an Importer on Credit