What term defines the practice of selling accounts receivable to a third-party financial institution at a discount to obtain immediate cash flow?

Explanation

• Factoring is a financial transaction where a business sells its invoice receivables to a third-party factor at a discount in exchange for immediate cash.
• Recourse Factoring leaves bad debt risk with the business; Non-Recourse Factoring transfers credit default risk entirely to the factor.
• Factoring improves immediate working capital liquidity without adding formal balance sheet debt.