Buying a company’s accounts receivable on a nonrecourse basis is known as _________ *
a. Trading
b. Billing
c. Stocking
d. Factoring
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Answer:
factoring is the answer
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The correct answer is OPTION D: Factoring.
- A factor is a short-term, non-recourse loan earned by selling receivables to a third party.
- All collection risks, including credit losses, are considered.
- Factoring is most widely employed in the apparel industry, although it's also utilized in other fields.
- The two fundamental types of factoring are discount factoring, in which the factor pays a discounted price for receivables before they mature, and maturity factoring, in which the factor pays the client the purchase price of the factored accounts upon maturity.
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