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Which of the following are benefits of ‘with-recourse’ factoring for PKA Co?
1 A fall in bad debts
2 A reduction in accounts receivable staffing costs
3 An improvement in short-term liquidityAnswer is 2 & 3 but i thought with the professional experience and skills of factor they will help to collect at least some part of bad debts, this will lead to a fall in bad debts.
Seek for your advise John. ThanksCertainly it is likely to result in a fall in bad debts, but it is not guaranteed that will be the case.
(I am guessing that you found this as a Section B question in a Revision Kit. If you have then they have changed the original exam question to make it in line with the current exam format. Thee original question and answer made no mention of factoring, so the Revision Kit will have added this question and it is not a very good question because of what you have written 🙂 )
Thanks John. Yes its from BPP revision kit.
Thanks so much for the explanation.
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