Question

Which of the following represents a possible characteristic of an eligible factoring Client?

	a.	Rapidly growing sales
	b.	Significant current or recent losses
	c.	Inadequate or impaired capital
	d.	High account receivable concentration
	e.	All of the Above

Answer 1

A firm to be eligible for factoring needs to show a sound credit quality as well as performance especially growth in sales. Current or recent losses do not make a firm eligible for factoring as well as inadequate or impaired capital. This is because, only a firm having sound credentials would expect good collection of account receivables. Moreover, if the account receivable is concentrated over single or few debtors , the risk of repayment is high in factoring.

Answer is

a.

Rapidly growing sales