What do you understand by the term 'factoring' with respect to management of accounts receivable?

CS Executive · Financial and Strategic Management · PYQS · June 2021
What do you understand by the term 'factoring' with respect to management of accounts receivable?
(A) Use of accounts receivables as prime collateral for a secured loan
(B) Pledging of accounts receivables to a lender
(C) Outright sale of accounts receivables to a financial agency
(D) Encashing accounts receivable before closure of accounts

Answer & Explanation:

Correct Answer: Option (C)

Official answer key: (C).

Topics: Working Capital Management

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