Which of the following is NOT listed as a benefit of discounting in equipment finance?

• A. Higher upfront commission, less credit risk, and no servicing responsibility.
• B. Higher upfront commission, more credit risk, and no servicing responsibility.
• C. Higher upfront commission, less credit risk, and outsourced servicing.
• D. Longer funding timelines.

Answer: (D)

Discounting in equipment finance involves selling the right to collect future payments to a lender or factor at a discount, in exchange for immediate funds. The main advantages typically cited are getting a higher upfront commission, transferring or reducing credit risk because the factor assumes the borrower’s obligation, and (depending on the arrangement) outsourcing servicing or eliminating servicing duties for the originator. The option suggesting longer funding timelines does not fit as a benefit, because discounting is used to accelerate liquidity by providing cash now rather than waiting for long payment streams.