Question

To reduce the cost of collecting its accounts receivable, a company sells its accounts receivable to a financial organization. The service is called:

a. collection agency advance
b. lock-boxing
c. Factoring
d. Funding

Answer 1

Factoring is the service that a company uses to reduce the cost of collecting its accounts receivable.

Step-by-step explanation:

The correct service that a company utilizes to reduce the cost of collecting its accounts receivable is factoring. Factoring is when a company sells its accounts receivable to a financial organization, known as a factor, at a discount. The factor then takes over the responsibility of collecting the payments from the customers.