What do we call companies that provide short-term financing to firms by purchasing accounts receivable at a discount?
A) credit agents
B) investment bankers
C) commercial paper houses
D) factors

Question

Quizplus · Accepted Answer

Companies that provide short-term financing to firms by purchasing accounts receivable at a discount are called factors. Factors provide immediate cash to their clients, enabling them to meet their immediate financing needs. Factors assume the credit risk associated with collecting the accounts receivable, and they collect the full amount owed from the debtor. The difference between the discounted purchase price paid by the factor and the full amount of the accounts receivable is the factor's fee for providing the financing.

What Do We Call Companies That Provide Short-Term Financing to Firms