Characteristics of factoring accounts receivable include all of the following except which one?

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Factoring accounts receivable involves transferring the ownership of the receivables to a third party, typically a finance company, in exchange for immediate cash. The finance company assumes the risks of nonpayment and collects the outstanding debts from the customers. Therefore, the firm does not incur any losses from nonpayment, which distinguishes factoring from other forms of financing such as loans or lines of credit. The other choices (A, B, and D) are true characteristics of factoring accounts receivable.

Characteristics of Factoring Accounts Receivable Include All of the Following