Tobit Financing offers short-term financing plans to other companies. It buys the accounts of other companies at a discount and collects the full amount from the customers of those companies. Which of the following short-term financing options is being provided by Tobit Financing in this scenario?
A) Short-term bank loans
B) Commercial paper
C) Factoring
D) Trade credit

Question

Quizplus · Accepted Answer

Tobit Financing is engaging in factoring, where it purchases accounts receivable from other companies at a discount and then collects the full amount from the customers.

Tobit Financing Offers Short-Term Financing Plans to Other Companies