The sale of accounts receivable to a third party for a discount is called factoring.

Name: The sale of accounts receivable to a third party for a discount is called factoring.
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This is correct. Factoring is the sale of accounts receivable to a third party (called a factor) for a discount. The factor then collects on the accounts receivable from the customers, leaving the original seller with immediate cash flow.

The Sale of Accounts Receivable to a Third Party for a Discount