Why would a company want to factor or pledge their receivables if they have to give up 10% or more of the funds owed them by their customers?© BrainMass Inc. brainmass.com October 10, 2019, 4:50 am ad1c9bdddf
Factoring or pledging is important tool of working capital management. "Pledging is placing accounts receivable as collateral for a loan (typically from a bank or finance company). Factoring is physically selling accounts receivables (also to a bank or finance company) as a way of speeding up the receipt of cash. The purchaser of the receivables is known as a factor.
"Sometimes, using accounts receivable ...
Solution discusses factor or pledge receivables