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To: Rich Young who wrote (60755)	8/25/1998 12:32:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Rich, the purpose behind factoring A/R is to generate cash. Factors usually don't want to touch accounts where there is a strong likelihood of default, and so would avoid accounts where payment is overdue. Some businesses run all of their A/R through factors. You ask: Don't they just sell the right to collect on an account at a discount to face? That's exactly what they do. Suppose you have created A/R of $100 MM this month. You might sell the entire bunch off to a factor for $90MM. But that represents $10MM in foregone profits. TTFN, CTC