A factor purchases receivables from businesses for a fee and collects the remittances directly from customers.

Question

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This describes a typical factoring arrangement. The factor buys the accounts receivable from a business and then collects payment directly from the customers who owe the money. The business receives cash upfront from the factor, minus a percentage fee charged by the factor for taking on the risk and administrative work of collecting the receivables.

A Factor Purchases Receivables from Businesses for a Fee and Collects