Companies selling their receivables
Not what you're looking for?
An article recently appreared in the Wall Street Journal indicating that compies are selling their receivables at a record rate. Why are companies selling their receivables?
Purchase this Solution
Solution Summary
A more than 200 words text explaining the facts.
Solution Preview
When a company sells its receivables to a finance company, it is no different than a retail merchant who sells to consumers on credit cards. The merchant is essentially selling the receivable to the credit card company who pays the merchant the cash within 2 days and then takes the responsibility for collecting the payment from the consumer. The credit card company acts as a factor for the retail merchant. In fact, the credit card can be considered a "factoring card."
<br>
<br>The finance company will typically charge 3-5% of the invoice to buy the invoice from the company. This can be a small price to pay for getting the cash early and for letting the finance company take care of tracking and collecting the receivables. In fact, even after paying the finance company that fee, your company can easily come out ahead because:
<br>
<br>(1) There can be ...
Purchase this Solution
Free BrainMass Quizzes
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Motivation
This tests some key elements of major motivation theories.