Short Term Working Capital B11-12b
Identify some advantages and disadvantages of factoring, as a form of financing.
- Advantages:
- Provides cash for general use; compensating balances are not required; commonly available; flexible as receivables are dynamic assets.
- Disadvantages:
- Cost may be greater than other forms of financing.
- When sold with recourse, the company has ongoing risks.
- Might impact relationship with customers.
