Asked by Jaylee Field on Apr 24, 2024
Which of the following is the best definition of accounts receivable financing?
A) The time between receipt of inventory and payment for it.
B) A secured short-term loan that involves either the assignment or factoring of receivables
C) The time between sale of inventory and collection of the receivable.
D) Costs that rise with increases in the level of investment in current assets.
E) A forecast of cash receipts and disbursements for the next planning period.
Accounts Receivable Financing
A type of financing arrangement wherein a business uses its outstanding invoices as collateral to receive immediate funds from a lender.
Secured Short-Term Loan
A loan that is backed by collateral and has a maturity period of one year or less.
Assignment
The transfer of rights, property, or responsibilities from one party to another.
- Understand the concept of accounts receivable financing and its effect on business operations.
Learning Objectives
- Understand the concept of accounts receivable financing and its effect on business operations.