Question:

Can a company sell their receivables?

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Can a company sell their receivables?

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  1. Yes.  It's called "factoring" and involves selling them to another party at a discount.  It would usually be done when a company (likely a small operation) needs cash fast and doesn't want to get another bank loan.  There are some things to consider, which are covered in the provided link.


  2. Yes, companies sometimes need cash before customers pay their account balances. In such situations, the company may choose to sell accounts receivable to another company that specializes in collections. This process is called factoring, and the company that purchases accounts receivable is often called a factor. The factor usually charges between one and fifteen percent of the account balances. The reason for such a wide range in fees is that the receivables may be factored with or without recourse. Recourse means the company factoring the receivables agrees to reimburse the factor for uncollectible accounts. Low percentage rates are usually offered only when recourse is provided.

  3. Yes, it's called factoring and it's done at a discount.

  4. This is very common in the garment industry.

    Yes!

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