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ILLUSTRATION 17 A Factoring firm has credit sales of ? 360 lakhs and its average collection period is 30 days. The financial controller estimates, bad debt losses are around 2% of credit sales The firm spends 3 1,40,000 annually on debtors administration. This cost comprises of telephonic and fax bills along with salaries of staff members. These are the avoidable costs. A Factoring firm has offered to buy the firm's receivables. The factor will charge 1% commission and will pay an advance against receivables on an interest @15% p.a. after withholding 10% as reserve. What should the firm do? Assume 360 days in a year