Section A

AgriGrow Co is an agricultural supplier facing seasonal cash flow shortages. The finance director is considering using either invoice discounting or factoring to improve liquidity.

Which of the following statements correctly distinguishes between factoring and invoice discounting?

Factoring usually involves the outsourcing of the sales ledger administration, whereas invoice discounting does not.

Invoice discounting is always provided on a non-recourse basis, whereas factoring is always with recourse.

Factoring is a confidential arrangement where customers are unaware of the factor's involvement.

Invoice discounting provides bad debt protection, whereas factoring does not.