Financial institutions have developed a variety of methods a company to use rece

Question

Financial institutions have developed a variety of methods a company to use receivables to obtain immediate cash. The methods differ with respect to which rights and risks are retained by the transferor (the original holder of the receivable) and those passed on to the transferee (the new holder, usually a financial institution).

1. Describe the alternative methods available for companies to use their receivables to obtain immediate cash.

2. Discuss the alternative accounting treatments for these methods.

(Please answer in laymens terms if possible. Cheggs textbook solution for this question is a little confusing...)

Explanation / Answer

The company can use Collection agency alternative

Instead of losing part of expect income from loans, fees for invoice or percent fees, company should also use a sustainable method, AR management apps. Keep all the money from Invoice, do not damage to business relationship(sending someone to collection agency is a bit harsh) and business will be healthier in the end. AR management apps let we take the collection process into our owm hands and they make it easy to succesfully collect on pasr due invoices. Thr app, The FG receivable manager allow us to send pre-loaded or customized emails, make calls and track all customer correspondence. This method are proven get the cash we are owed,fast.

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