Factoring receivables is beneficial to a seller for all of the following reasons except:
A)Allows firms to receive cash earlier.
B)Passes ownership of the receivables to the factor.
C)There are no fees for factoring.
D)Seller avoids the cost of billing and accounting for receivables.
E)May transfer the risk of bad debts to the factor.

Question

Quizplus · Accepted Answer

This answer is the correct one because there are fees associated with factoring, and it's typically a percentage of the amount of the receivable factored. The other options are all benefits of factoring receivables.

Factoring Receivables Is Beneficial to a Seller for All of the Following