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    Question

    Which of the following financial products is most

    commonly utilized by MSMEs to address short-term liquidity requirements and ensure the smooth functioning of day-to-day operations?
    A Bill Discounting. Correct Answer Incorrect Answer
    B Factoring Correct Answer Incorrect Answer
    C Venture Capital Correct Answer Incorrect Answer
    D Trade Credit Correct Answer Incorrect Answer
    E Securitization Correct Answer Incorrect Answer

    Solution

    Bill Discounting is a common method used by MSMEs to manage short-term liquidity requirements . This process allows MSMEs to sell their receivables (i.e., outstanding invoices) to financial institutions in exchange for immediate cash. This helps businesses maintain cash flow without waiting for customers to pay their dues.

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