Question

Under the factoring arrangement, the factor ______.

Options

• Produces and distributes the goods or services 

• Makes the payment on behalf of the client

• Collects the client’s debt or account receivables

• Transfer the goods from one place to another

Answer 1

Under the factoring arrangement, the factor collects the client’s debt or account receivables.

Explanation:

Factoring refers to an arrangement under which financial service providers known as ‘factors’ agree to provide certain types of services to business owners. These services are collecting bill receivables, discounting bills, providing information about the credit worthiness of clients, etc. Hence, the correct answer is option collects the client's debt or account receivables.