Author Question: What role does a factor play in providing short-term financing to a firm? Why would firms that rely ... (Read 140 times)

Jipu 123 · **on:** Jul 14, 2018

What role does a factor play in providing short-term financing to a firm? Why would firms that rely heavily on credit sales find factoring attractive?

Question 2

A common tactic of corporate raiders is to start a proxy fight.

Indicate whether the statement is true or false

scrocafella · **Reply #1 on:** Jul 14, 2018

Answer to Question 1

A factor is a company that buys the accounts receivables of other firms. It makes a profit by purchasing the receivables at a discount and then collecting the full amount owed from the credit customers.
Although firms that use factors don't receive the full amount for their receivables, factoring has some advantages. For example, it allows the firm to receive its cash almost immediately rather than having to wait for the credit customers to pay. Since the factor is responsible for collection efforts, the firm may be able to free up resources and use them elsewhere in the organization.

Answer to Question 2

True