To reduce the cost of collecting its accounts receivable, a company sells its accounts receivable to a financial organization.The service is called:

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Factoring involves selling accounts receivable to a third party, typically a financial organization, at a discount. This not only helps the company reduce the cost of collecting its accounts receivable but also provides immediate cash flow to the company, allowing it to focus on its core business. Collection agency advance, lock-boxing, and funding are not specifically related to the sale of accounts receivable to a third party.

To Reduce the Cost of Collecting Its Accounts Receivable, a Company