What are the differences between receiving payment on a collection basis, on an average collection basis, and on a maturity basis?
What will be an ideal response?
Factors pay exporters in a variety of ways. One is on a collection basis. Under this arrangement, the exporter gets paid when the factor receives funds from the importer. Exporters also get paid by factors when the importer is declared insolvent or when a specific political event in the contract occurs that prevents the importer from paying.
The exporter may also receive payment on an average collection basis, which reflects the past experience of the factor collecting from an importer. The factor calculates the average number of days that a particular exporter's customers have taken to pay and remits payment to the exporter in the following month, based on that average experience. For example, if an importer pays earlier or later than average, the exporter receives interest from or pays interest to the factor.
Funds can also be remitted on a maturity basis. Under this method, the factor calculates the weighted-average maturity date of all invoices maturing in a particular month, adds a specified number of collection days, and pays the sum of that month's invoices on that date.
You might also like to view...
Earnings per share:
a. required disclosure for publicly traded corporations b. component of the entity has been sold or will be sold c. costs generally associated with downsizing d. reports a series of intermediate subtotals e. accounted for prospectively f. tangentially related to normal operations g. accounted for retrospectively by revising prior years' statements h. other comprehensive income i. total non-owner change in equity j. ability of reported income to predict future earnings
As the salesperson entered the prospect's office, the salesperson extended his hand and said, "Your old college roommate Tiara Johns suggested I call on you." This action occurred in which stage of the creative selling process?
A) approach B) prospect and qualify C) preapproach D) close E) follow-up