Surf 'N' Sun Shop sells ski boats and other boating accessories. It receives most of its inventory about three months in advance of the summer season, but it is not able
to pay for the inventory up front. Instead, its suppliers allow Surf 'N' Sun to use its inventory as collateral. This type of agreement is called
O unsecured short-term financing,
O long-term lending.
O factoring
secured short-term financing.
O a promissory note.

In this scenario, the agreement between Surf 'N' Sun Shop and its suppliers involves using the inventory as collateral, allowing Surf 'N' Sun to obtain financing. This type of arrangement is known as factoring secured short-term financing. Factoring refers to the process of a business selling its accounts receivable (or in this case, inventory) to a third party (the suppliers) at a discount in exchange for immediate cash. The factoring is secured by the inventory, meaning it serves as collateral to ensure repayment of the financing. This arrangement provides Surf 'N' Sun with the necessary funds to acquire inventory in advance of the summer season without needing to pay for it upfront.