Question

Multiple Choice Question:

Under the factoring arrangement, the factor

Options

• Produces and distributes the goods or services 

• Makes the payment on behalf of the client

• Collects the client's debt or account receivables

• Transfer the goods from one place to another

Answer 1

Factoring refers to an arrangement under which financial service providers known as ‘factors’ agree to provide certain types of services to business owners. These services are collecting bill receivables, discounting bills, providing information about the credit worthiness of clients, etc.

Hence, the correct answer is option Collects the client's debt or account receivables.