Answer (A) is correct . A factor purchases receivables and assumes collection risk. Cross-border factoring is a method of consummating a transaction by a network of factors across borders. The exporter’s factor contacts correspondent factors in other countries to assist in the collection of accounts receivable.
Answer (B) is incorrect because Countertrade involves barter.
Answer (C) is incorrect because Forfaiting is a form of factoring. It involves the sale by exporters of large, medium- to long-term receivables to buyers (forfaiters) who are willing and able to bear the costs and risks of credit and collections.
Answer (D) is incorrect because If the draft is a time draft (also called a trade acceptance), it will be payable at a specific future time. The time draft is returned to the exporter who may present the draft for payment when due or use it as collateral for a loan.
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