Fenix is a poultry farm situated in a small town. The business was good till the early days of 2020. Then the pandemic struck, and the business started to see a drop in sales and in the collection of receivables. The entrepreneur is concerned as more and more retailers request him not to bank the cheques given by them to him. He is under stress because if he does not bank the cheques his business will suffer due to cash flow. He can opt from the following:-

Debt financing sources

Trade Credit

Credit given by suppliers who sell goods on account.

Accounts Receivable Financing

Short-term financing involves either the pledge of receivables as collateral for a loan or the sale of receivables at a discounted value (factoring).

Factoring

The sale of accounts receivable at discounted values

Finance Companies

Asset-based lenders that lend money against assets such as receivables, inventory, and equipment.

Evaluate each of these options available to him and suggest the best option for him.