How do factors assist in treasury operations?

Factors play a crucial role in treasury operations by providing immediate cash flow through the purchasing of accounts receivable. This process, known as factoring, allows businesses to receive quick financing against their outstanding invoices. Instead of waiting for customers to make payments, a company sells its receivables to a factor, who then takes on the responsibility of collecting those debts. This immediate access to cash can help businesses manage their operational expenses and invest in growth opportunities without the delay of customer payments.

The practice of factoring is particularly beneficial for companies that may have cash flow issues due to delayed payment cycles. It supports treasury functions by improving liquidity and ensuring that the organization has the cash on hand to meet its obligations. Companies can use this cash to pay suppliers, cover payroll, or fund new projects, enhancing overall financial stability.

In contrast, other options describe different aspects of financial management that do not directly align with the role of factors in treasury operations. The management of investments for long-term growth and the assessment of corporate credit risks involve different financial strategies. Similarly, issuing long-term bonds is a method of raising funds rather than a means of improving short-term cash flow.