ACCA FM · Chapter 4 · Question 11 of 12
Which of the following correctly distinguishes invoice discounting from factoring?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) In invoice discounting the company keeps control of its sales ledger and collects the debts itself
Explanation
Invoice discounting is a way of raising finance against selected invoices: the provider advances a percentage of their value, while the company continues to administer its sales ledger and collect the debts, often without customers being aware. Factoring typically involves the factor taking over sales ledger administration and collection.
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