Asked by Martin Sanchez on May 10, 2024
Verified
A factor purchases receivables from businesses for a fee and collects the remittances directly from customers.
Receivables Businesses
Companies that specialize in managing and collecting accounts receivable on behalf of other businesses.
- Acquire knowledge of the principles and strategies for speeding up the receipt of cash from accounts receivable.
- Comprehend the impact of receivable transactions on a firm's financial health.
Verified Answer
GW
Gracie WebsterMay 12, 2024
Final Answer :
True
Explanation :
This describes a typical factoring arrangement. The factor buys the accounts receivable from a business and then collects payment directly from the customers who owe the money. The business receives cash upfront from the factor, minus a percentage fee charged by the factor for taking on the risk and administrative work of collecting the receivables.
Learning Objectives
- Acquire knowledge of the principles and strategies for speeding up the receipt of cash from accounts receivable.
- Comprehend the impact of receivable transactions on a firm's financial health.