Factoring:
A)is a more expensive method of financing than borrowing from a bank.
B)places the risk of uncollected accounts receivable on the small business owner.
C)is best used as a long-term source of capital.
D)is a type of trade credit.

Question

Quizplus · Accepted Answer

Factoring involves selling your accounts receivable to a third party (the factor) at a discount. It is generally considered more expensive than traditional bank financing because the factor charges fees for their services, which can reduce the overall amount of money the business receives.