Significance of Factoring

Significance of Factoring Deal:

1. Factoring is significant source of cash inflow. It can be employed for fulfilling the requirement of cash for paying our liabilities on time. When we see that debtor conversion period is too long however creditor conversion period is very short, we contract of factoring for paying our creditors.

2. We have to sustain our cash balance for paying expenditures. We predict our cash balance with following formula and when there is any shortage of our physical cash balance, we might contract of factoring.

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