question archive Factoring is a commonly used financing solution by exporting companies to convert its foreign receivables into immediate cash by selling them to a factoring house
Factoring is a commonly used financing solution by exporting companies to convert its foreign receivables into immediate cash by selling them to a factoring house
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Factoring is a commonly used financing solution by exporting companies to convert its foreign receivables into immediate cash by selling them to a factoring house. A “factoring house” is a:
A Company that helps exporters establish credit in a foreign market.
B Company that helps exporters plan cash Dow in a way to extend payables as much as
possible while accelerating collection of receivables.
C Company that purchases domestic and foreign receivables and provide immediate
payment of the invoice to the exporter, in part or in full.
D Company that provides margin-based financing to the exporter for the time the exporter
places the receivable into collections with a collection agency.
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Answer: Option C
Explanation: A "factoring house" is a company that purchases domestic and foreign receivables and provide immediate payment of the invoice to the exporter, in part or in full. This is because a factoring house is concerned with the buying and paying exporter immediately for the receivables both from domestic and foreign markets. Therefore, option C is the correct answer. Option A is incorrect because factoring house helps exporters credit in foreign as well as domestic market. Option B is incorrect because it is irrelevant to a factoring house. Option D is incorrect because a factoring house is not associated with providing margin-based financing to the exporter.
