Elucidate the features of factoring.

1.	Elucidate the features of factoring.
Answer» 1. Maintenance of book – debts : A factor takes the responsibility of maintaining the accounts of debtors of a business institution. 2. Credit coverage : The factor accepts the risk burden of loss of bad debts leaving the seller to concentrate on his core business 3. Cash advances : Around eighty percent of the total amount of accounts receivables is paid, as advance cash to the client. 4. Collection service : Issuing reminders, receiving part payments, collection of cheques from part of the factoring service. 5. Advice to clients : From the past history of debtors, the factor is able to provide advises regarding the credit worthiness of customers, perception of customers about the products of the client, etc.

Answer»

1. Maintenance of book – debts : A factor takes the responsibility of maintaining the accounts of debtors of a business institution.

2. Credit coverage : The factor accepts the risk burden of loss of bad debts leaving the seller to concentrate on his core business

3. Cash advances : Around eighty percent of the total amount of accounts receivables is paid, as advance cash to the client.

4. Collection service : Issuing reminders, receiving part payments, collection of cheques from part of the factoring service.

5. Advice to clients : From the past history of debtors, the factor is able to provide advises regarding the credit worthiness of customers, perception of customers about the products of the client, etc.

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