Coral limited currently has turnover of $25m. Receivables turnover is currently 40 days. Interest is charged on the overdraft at 12%. A factoring company has offered its services for an annual fee of 1% of turnover. The factoring company can reduce receivables turnover to 15 days.

The factor will also generate an admin saving for the company of $15,000. Should Coral limited accept the factors offer?

Answer rating: 100% (QA)

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