How Factoring Homework Answers Help You to Successfully Run a Business
Factoring Homework Answers are a part of the business process of an organization. It is a transaction of financial nature between different parties. It is used to hire a firm or any other party to collect the organization’s dues from their debtors and accounts receivables. So if you are a business owner or a finance student then Factoring Assignment Answers are essential for your knowledge.
Parties involved in a Factoring Homework Answers
In a Factoring Assignment Answers, there are three major parties involved. They have been explained in details below:
The Company or the Organization is the main party here which gives rise to the financial process of Factoring Homework Answers. The company has some debtors and bills receivables which they are unable to realise. This leads to a shortage of cash flow and subsequent aging of such debtors. The shortage of cash flow can result in disruption in the operations of the organization. While aging of the debtors is a part of the scrutiny of the audit team to ensure that all of the debtors are realized within a stipulated period of time.
This is done to ensure that the funds collected from the debtors within the predefined time frame. This helps to use the funds as per the needs and requirements of the organization. It also reduces the likelihood of the company to borrow loans or take advances and reduces the payment of interest on such undertakings.
The Debtors of the Organization are the people or other organizations who owe money to the organization. The money owed can be in the form of loans or advances that the other organizations took from your organisation. Or it could be any the goods that were sent and approved by the debtors about whom they still have to pay the price of the goods. It can also be due to any services that the debtors accepted in the past for which payment is pending.
Accounts Receivables or Bills Receivables are also a part of the Debtors of the firm. A Bill Receivables is accepted by the organization when another firm or company generates a bill accepting that they have to pay you for the good bought or services used. Subsequently, you have to accept the bill so generated. With the bills receivables, you can have them discounted with banks to get the payment earlier than the stipulated time period.
The Factor is the other party involved in the process of Factoring. It accepts the debtors and bills receivables of your organization. It is trusted to collect the dues from all of them in a shorter period. They collect a certain percentage of the collection and maybe also charge a fee.
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