The use of factoring as a company financing instrument

Abstract

Business management is focused on achieving financial goals. Along with the development of a market economy based on free competition, a trade policy developed between contractors consisting in postponing payment deadlines for services rendered or selling goods, ie trade credits. In recent years, the number of recipients regulating their liabilities has been systematically increasing with delay, resulting in problems with suppliers’ liquidity. In order to avoid the negative effects of delays and significantly reduce the risk of insolvency, enterprises look for external sources of financing their current operations, very often in the form of factoring. The purpose of this article is to develop a factoring model as a tool for maintaining financial liquidity. The final result of the study is to present the practical application of factoring in the company based on the model. The main research method used in the article is a descriptive analysis with elements of descriptive statistics and literature analysis of the subject.