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Describe the benefits and risks of banker's acceptance financing and accounts receivable financing. Under which form...

Describe the benefits and risks of banker's acceptance financing and accounts receivable financing. Under which form of financing will a bank be liable for defective goods?

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A bank risks the acceptance of financing an account when there are discrepancies, or differences, in terms of the required documents. A risk also lies in that there must be a substantial line of credit to the borrower if a banker is to accept the financing account. The benefit to the financial institution in the financing deal is that under the holder in due course rule the transferee can still qualify as a holder and take greater rights. This protection in acceptance financing allows the bank to remain as an intermediary to the businesses transaction, so if there is a breach of contract the bank still receives the funds and the complaint is filed separately. Accounts receivable financing is a little different because the factor holds the debt and if any breach of contracts arises then they are to be under the liability of the bank, which is less desirable from their perspective.

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