A type of short-term loan where the borrower sells its receivables to the lender up-front, but at a discount to face value, is called:
A)a compensating balance.
B)assigned receivables ﬁnancing.
C)a letter of credit.
D)factored receivables ﬁnancing.
E)a bond.

Question

Quizplus · Accepted Answer

Factored receivables financing involves selling accounts receivable to a lender at a discount to face value in exchange for immediate cash. This type of loan is often used by businesses to improve their cash flow and take advantage of early payment discounts offered by their suppliers.

A Type of Short-Term Loan Where the Borrower Sells Its