Asked by Stacie Batchelor on Apr 25, 2024

If a company decides to factor its receivables without recourse, it will:

A) offer the receivables to a lending institution as collateral.
B) sell receivables to a lender and remain liable for uncollectible accounts.
C) sell the receivables at a discount.
D) offer receivables that are more than 120 days old to a collection agency.
E) none of the above defines factoring receivables.

Factor Receivables

The financial practice of selling accounts receivable to a third party at a discount to immediately generate cash.

Uncollectible Accounts

Accounts receivable that are recognized as not being collectible, representing losses to the company.

Lending Institution

A financial institution that provides loans to individuals or businesses.

  • Gain insight into the various sources of short-term funding and their financial implications.