Another disadvantage is the impersonality of the dealings; a bank is much more likely to help a good customer weather a storm than is a commercial-paper dealer.
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When a receivable is pledged, the borrower retains the risk that the person or firm that owes the receivable will not pay; this risk is typically passed on to the lender when factoring is involved.
When loans are secured by inventory, the lender takes title to them.
It is not necessary to purchase assets in order to use them.
Long Term Financing Paper
Railroad and airline companies in the United States, for instance, have acquired much of their equipment by leasing it.
A firm customarily buys its supplies and materials on credit from other firms, recording the debt as an account payable.
This trade credit, as it is commonly called, is the largest single category of short-term credit.
He may or may not take physical possession of them.
Under a field warehousing arrangement, the inventory is under the physical control of a warehouse company, which releases the inventory only on order from the lending institution.