What is Factoring?

a. An easy way of raising capital from a factoring company by small business

b. Selling of account receivables on a contract basis for cash payment to a factor before it is due

c. An arrangement for raising short term money against prepaid expenses

d. A method of discounting of long term bills

ANSWER: Selling of account receivables on a contract basis for cash payment to a factor before it is due

Explanation:

The three parties involved are the ones who purchase the receivable, the ones who sell the receivable, and the debtors who have a Financial Liability.