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    Question

    A small business owner is facing a cash flow crunch due

    to delayed payments from customers. The business owner has a significant amount of outstanding invoices and needs immediate access to funds to cover operational expenses. Which financing option would be the most appropriate for this business owner to quickly convert their receivables into cash?
    A Forfaiting Correct Answer Incorrect Answer
    B Crowdfunding Correct Answer Incorrect Answer
    C Bill investing Correct Answer Incorrect Answer
    D Factoring Correct Answer Incorrect Answer
    E Peer-to-Peer Lending Correct Answer Incorrect Answer

    Solution

    Factoring involves selling accounts receivable (invoices) to a third-party financial institution (factor) at a discount, providing the business owner with immediate cash flow.

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