Factoring accounts receivable has all of the following characteristics except:

Question

Quizplus · Accepted Answer

Factoring accounts receivable involves selling the receivables to a factor, who then takes on the responsibility of collecting payment from customers. This means that the borrower no longer makes collection efforts and the customer payment is made directly to the factor. Additionally, factoring accounts receivable does not necessarily remove the balances from the balance sheet, as it depends on the type of factoring agreement. Therefore, the correct answer is D, as factoring accounts receivable involves outsourcing the collection efforts to the factor.

Factoring Accounts Receivable Has All of the Following Characteristics Except