Question

Companies can use their account receivable as collateral when obtaining a __________ (assest-based lending) or sell them through factoring. A. Debt B. Loan C. Bond D. Credit

Answer 1

Answer:

DEBT OR CREDIT

PLZ MAKE ME BRAINLIST

Answer 2

Answer:

B. Loan

Explanation:

• Account receivable or AR is the payment or proceeds (Balance of money) that a company receives in response to a service delivered /used/purchased but not yet paid by the customers.
• Factoring or AR financing is one of the alternative ways to bank financing.
• AR or the balance of money are essentially a company's incoming cash, obtained from sales transactions and paid invoices which is why they are treated as an asset.
• Hence the companies can use their account receivable as collateral when obtaining a short term or long term loan or as a line of credit (asset-based lending) or sell them through factoring.
• This is also called pledging.