The primary advantage that factoring accounts receivable provides is
A) the flexibility it gives to the borrower.
B) that the financial institution bears the risk of collection.
C) the low cost as compared with other sources of short-term financing.
D) that the financial institution services the accounts.

Question

Quizplus · Accepted Answer

Factoring accounts receivable allows the borrower to transfer the risk of collection to the financial institution, which can provide relief for the borrower's cash flow and working capital needs. This can also help to reduce the risk of bad debt for the borrower. Additionally, factoring accounts receivable can be a source of quick and flexible financing, as the amount borrowed is based on the value of the accounts receivable, rather than the creditworthiness of the borrower.

The Primary Advantage That Factoring Accounts Receivable Provides Is