Which of these describes a potential benefit of lease factoring?

Which of these describes a potential benefit of lease factoring?

• A. Increased operational costs
• B. Immediate access to cash
• C. Long-term lease commitments
• D. Higher interest rates

Answer: (B)

The correct response highlights that lease factoring provides immediate access to cash, which is a significant advantage for businesses. This process allows companies to convert the value of their lease contracts into cash quickly, enabling them to meet operational expenses or invest in new opportunities without waiting for lease payments to come in over time. Immediate cash flow can help businesses manage working capital more effectively, allowing them to cover costs such as payroll, inventory purchases, or unexpected expenses without the delays associated with standard lease payment schedules. This can be particularly beneficial for companies looking to seize growth opportunities or enhance their financial stability in the short term. In contrast, increased operational costs, long-term lease commitments, and higher interest rates are not beneficial outcomes of lease factoring, as they could create financial strain or limit flexibility for businesses.

The correct response highlights that lease factoring provides immediate access to cash, which is a significant advantage for businesses. This process allows companies to convert the value of their lease contracts into cash quickly, enabling them to meet operational expenses or invest in new opportunities without waiting for lease payments to come in over time.

Immediate cash flow can help businesses manage working capital more effectively, allowing them to cover costs such as payroll, inventory purchases, or unexpected expenses without the delays associated with standard lease payment schedules. This can be particularly beneficial for companies looking to seize growth opportunities or enhance their financial stability in the short term.

In contrast, increased operational costs, long-term lease commitments, and higher interest rates are not beneficial outcomes of lease factoring, as they could create financial strain or limit flexibility for businesses.