Vitale Jewelers obtains needed short-term funds by selling its accounts receivable to the Friendly Finance Company. Friendly Finance usually pays Vitale about 80% of the value of the receivables. Vitale Jewelers utilizes ________ as a means of raising short-term funds

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Factoring is the process of selling accounts receivables to a finance company or factor in exchange for immediate cash. Friendly Finance Company buys the receivables from Vitale Jewelers and pays about 80% of their value, providing Vitale with a quick infusion of cash to meet its short-term needs. Trade credit, revolving credit agreements, and receivable draft agreements are other methods of raising short-term funds, but they do not involve the sale of accounts receivables.

Vitale Jewelers Obtains Needed Short-Term Funds by Selling Its Accounts