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Dear Sir,
Can I ignore information of “bad debt ratio reduce to 2%” in the below question when calculation of factoring cost ?
Company has current bad debt ratio : 3%
If company use factor with non recourse agreement, bad debt ratio reduce to 2%
In this case, benefit from reducing bad debt due to use factor will be = 3% * account receivable ; regardless “bad debt ratio reduce to 2%” ?Thank you
Yes – if it is non-recourse factoring then they will save the whole 3%. (If it was with recourse factoring then they would only save 1%).
Thank you sir, maybe we do not need to use all information provided and maybe it is easy to make mistake.
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