Working capital management Flashcards
1
Q
What is factoring?
A
Factoring is a financial arrangement where a business sells its invoices (accounts receivable) to a third party (called a factor) at a discount in exchange for immediate cash.
2
Q
Why use factoring?
A
Useful where a company has a poor record of collecting amounts due, or is facing problems raising short-term finance.
3
Q
What is invoice discounting?
A
The purchase of trade debts at a discount
