Under an advance factoring contract, following flow of money takes place: A: Factor pays a percentage of the invoice face value to the seller at the time of sale B: The remainder of the purchase price is held by factor until the payment by the account debtor is made. C: The cost associated with the transaction is paid upfront by the seller to the factoring agent.

Question

Quizplus · Accepted Answer

Under an advance factoring contract, the seller receives a percentage of the invoice face value at the time of sale (option A), while the remainder of the purchase price is held by the factor until the account debtor makes payment (option B). The cost associated with the transaction is typically deducted by the factor from the remaining balance and not paid upfront by the seller (option C). Therefore, options A and B are correct, but option C is not. The best choice is D, which includes options A and B but excludes option C.

Under an Advance Factoring Contract, Following Flow of Money Takes