How does accounts receivable factoring work
How does AR (accounts receivable) factoring work? What are the risks and benefits to the two parties involved?
Expert
Factoring is when one firm sells AR (accounts receivable) to another. The firm which is purchasing is called as a factor. The factor earns a profit by purchasing the AR at a discount. The risk is that some of the AR might default. The selling firm receives the cash it needs.
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