When accounts receivable are bought from a company for capital funding it is called

Question

Quizplus · Accepted Answer

When accounts receivable are bought from a company for capital funding, it is called factoring. This refers to a financial transaction in which a company sells its accounts receivable to a third-party called a factor at a discount. The factor then collects the debt from the company's customers and takes a fee for their services. Factoring is a common method of financing for small businesses that need cash flow to survive or grow.

When Accounts Receivable Are Bought from a Company for Capital