Answer:
Ans. Debtors are the people who owe money to a business. Debt factoring is a financial service that allows a business to raise funds based on the value owed to them by their debtors. Example: Receiving 80% of debtors outstanding debt on selling fabric abroad.
Advantages:
1. It reduces the probability of bad debt-debtors.
2. Non-recourse factoring allows for insurance against bad debts.
3. Companies don't have to chase up their own debtors.
4. Immediate sources of finance.
Disadvantages:
1. Without non-recourse factoring the company will still have to absorb losses.
2. It is expensive.
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