Asked by Jessica Guerrero on Jul 03, 2024
Verified
When sellers who offer installment payment terms to purchasers of their equipment cannot themselves finance installment,they can sell and assign that installment contract to a bank or sales finance company.
Installment Contract
An agreement where payment is made in parts or installments over a specified period, commonly used in the sale of goods and real estate.
Sales Finance Company
A company that provides financing to customers to purchase goods, often through loans or leases.
- Understand various financing options available for businesses.
- Comprehend the roles and terms of banks, finance companies, and other lending institutions in providing capital.
Verified Answer
JS
Javariah SohailJul 07, 2024
Final Answer :
True
Explanation :
This is a common practice known as "factoring." The seller receives immediate cash for the installment contract, and the bank or finance company takes over the responsibility of collecting the payments from the purchaser.
Learning Objectives
- Understand various financing options available for businesses.
- Comprehend the roles and terms of banks, finance companies, and other lending institutions in providing capital.