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Which of the following statements, concerning invoice
discounting, are true?Invoice discounting is the purchase of a selection of invoices (by
the provider of the discounting service) of trade debts at a
discount (TRUE)Hello tutor!
My question is how this statement becomes true because invoice discounter doesn’t purchase invoices they just took some invoices from client as mortgage and lend some proportion of money so this is not a purchasing of invoices.
However, in the case of non-recourse factoring, we can say that factor is purchasing invoices.With invoice discounting, the discounter purchases the invoices and they then receive the money that was owing.
No. With invoice discounting, the company received the money immediately they sell the invoice to the provider of the discounting service.
With factoring (whether with recourse or non-recourse) the company only gets the money when the factor have collected the debts. (The factor might give them an advance if they are prepared to pay interest, but that is a separate service and is just an advance on part of the money from the customer.
Have you watched my free lectures on this? The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
But in the case of non-recourse factoring, if factor didn’t collect cash then when will factor pay money to the client ?
At the end of the normal credit period that is given to the customers by the company.
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