In financial restructuring, what is debt factoring?
Answer and explanation
Correct answer: D. A financial transaction where a business sells its accounts receivable to a third party at a discount for immediate cash
- Step 1: Factoring involves selling outstanding customer invoices (terjatve) to a financial factor at a discount in exchange for immediate liquid funds, outsourcing credit collection. Answer: A financial transaction where a business sells its accounts receivable to a third party at a discount for immediate cash. Why not the others: Court debt cancellation is insolvency relief, issuing bonds is debt capitalization, and turning debt to equity is a debt-equity swap.
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