Firms that would benefit from a factoring service are firms that:
A) need to establish a source of longterm financing and avoid fees and commissions.
B) have larger than necessary cash balances and want to find a safe way to invest the excess cash.
C) rely heavily on credit sales and want to speed up their receipt of cash.
D) plan to issue large sums of commercial paper in the near future.

Question

Firms that would benefit from a factoring service are firms that:
A) need to establish a source of long­term financing and avoid fees and commissions.
B) have larger than necessary cash balances and want to find a safe way to invest the excess cash.
C) rely heavily on credit sales and want to speed up their receipt of cash.
D) plan to issue large sums of commercial paper in the near future.

Quizplus · Accepted Answer

Factoring services provide immediate cash for accounts receivable, which is beneficial for firms that rely heavily on credit sales and want to speed up their receipt of cash. Option A describes the benefits of long-term financing, while option B is about investing excess cash. Option D focuses on commercial paper issuance.

Firms That Would Benefit from a Factoring Service Are Firms