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Question text Which form of finance allows a company to raise funds by selling its accounts...

Question text

Which form of finance allows a company to raise funds by selling its accounts receivable?

Select one:

a. Bank overdraft

b. Wholesale finance

c. Debtor finance

d. Bridging finance

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Answer #1

Answer: Debtor Finance

The form of finance which allows a company to raise funds by selling its account receivable is FACTORING. It is a financial transaction which is a type of debtor finances in which the company sells its account receivable to a factor i.e. a third party at a pre-decided factoring commission. This is done when a company is in urgent need of cash to meet its requirements. So it appoints a factor for early realization of its account receivables.

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