Which of the following statements about factors is TRUE?

Factors play a crucial role in improving a business's cash flow by purchasing accounts receivable, which is especially beneficial when companies face cash flow gaps. By selling their receivables to a factor, businesses can receive immediate cash, allowing them to continue operations, pay suppliers, or invest in growth opportunities without waiting for customers to settle their invoices.

This option reflects the true function of factors in the finance world. They provide liquidity and help businesses manage their cash flow more effectively, ensuring they have the working capital necessary to meet various obligations.

The other statements contain inaccuracies regarding the operations and reach of factoring. Factors can indeed purchase both overdue and current accounts receivable, and they operate across various industries, not being restricted to just one. Additionally, while factors can provide financing against sales, it is in the form of purchasing receivables rather than traditional loans.