The primary advantage that factoring accounts receivable provides is [blank].
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 transfers the risk of collection from the borrower to the financial institution. This allows the borrower to free up cash flow and reduces the risk of bad debt. While factoring may not always be the lowest-cost option for short-term financing, the advantage lies in the decreased risk and increased flexibility for the borrower. The financial institution also typically services the accounts, taking on collection responsibilities and providing expert advice to the borrower.

The Primary Advantage That Factoring Accounts Receivable Provides Is [Blank]