Once the firm has sold its receivables, the factors bear all the responsibility for collecting on the account.

Question

Quizplus · Accepted Answer

When a firm sells its receivables to a factor, the factor assumes the responsibility for collecting on the account. This is the main advantage of factoring for the selling firm, as it frees up resources and reduces the risk of bad debt. However, the factor may charge a fee or discount for assuming this risk and responsibility.

Once the Firm Has Sold Its Receivables, the Factors Bear