Question by Steven M: What is the sale of a loan receivable classified as on the statement of cash flows? What is the 'sale of a loan receivable' classified as on the statement of cash flows? Operating, financing, or investing? I don't think it's financing. Can anyone confirm this is actually investing? Best answer for What is the sale of a loan receivable classified as on the statement of cash flows?:
Answer by Don G
If the loan was classified as an Investment, then the proceeds from selling it would be Investing. But if it is simply the result of converting a Receivable to a Note, I would classify it as Operating, similar to Accounts Recv. But it is definitely not Financing.
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All cash is not equal. Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does ... Can You Trust the Cash Flow at Suburban Propane Partners?
Factoring accounts receivables is an alternative source of financing that can help you to increase immediate cash flow of your firm and use it to make your business grow. In a factoring accounts receivables transaction, you need to sell your receivables at a discount to a factoring company. Factoring accounts receivable is easily accessible and is a quick transaction. You need not wait for long time to get cash from the factors. Factoring accounts receivable helps in improving the cash flow of your firm, thus helping in the growth of a business.
There are several things that you should consider before you decide factoring accounts receivable for your organization. Cash flow is one of the main aspects that must be considered before factoring accounts receivable.
If you have a decrease in cash flow and have some current obligations to fulfill, then you should think of factoring accounts receivables. Your line of business is an important consideration. Businesses that have a significant time lag between the purchase of materials and final collection from the customer may be good for factoring accounts receivable. Start up firms who cannot obtain bank loans or funds from any other financial sources can benefit from factoring accounts receivable. Factoring accounts receivable helps a firm when it has been awarded a large job that requires immediate cash for its accomplishment and in turn results in huge profits. Factoring accounts receivable is beneficial to firms that have credit problems as it does not affect the credit report since factor is more concerned with the customer.You must do some research to find out the right factoring company for yourself.
You should deal with a reputed company that has good hands in factoring. You must prefer to hire the services of a company that has been recommended by a professional advisor or a business associate. Compare the quoted discount rates of companies while you do the research .It will give you a clear picture of the discounts available in the market for factoring accounts receivable. Be clear about the terms and conditions of the company before you sign any contract. You may even take the help of a broker who can help you find a good company dealing in factoring accounts receivable. Related Factoring Accounts Receivables to Improve Cash Flow Articles
