This work focusses on factoring as a new service in the financial industry. Over the past fifteen years, an increasing number of small and medium-sized companies have begun to consider factoring as a practical source of working capital. Unfortunately, the availability of accurate information and time has not kept the same pace with the growing interest in this used form of funding. The financial sector, especially the banking sector, has been hit by the difficulties generated by the tensions of debt dependence, which are affecting the banking market assessment and its ability to create medium and long-term funds. Consequently, making a comparison with the past, in general, the most valued valuation methods are the cost of funds which have increased significantly. Current economic conditions, characterized by credit constraints, make factoring one of the most favorable solutions for businesses. This funding method is one of the ways it takes a short time to negotiate and one of the easiest methods to provide working capital funds.
Factoring services offer an alternative to credit to companies that need little help with funds. By selling your receivables to a factoring company, you receive a portion of the forward amount and receive the rest, minus a percentage that the company receives as a payment as soon as the amount is collected. You get most of your funds before the customer has paid the account, instead of waiting until after paying the bill. The factoring service works to collect accounts receivable so that you can devote your resources and efforts elsewhere to your business. Through factoring, businesses can: enable their boards and senior management to make better informed decisions, proactively manage the provisions and effects on capital plans, make strategic decisions with a view to mitigating risks in the event of current underlying conditions, get assistance in understanding the evolving risk nature of the banking sector. Key words: Albania, Factoring, Services, Financial Institutions
Table of Contents
CHAPTER I INTRODUCTION
I. Research focus
1.1 Factoring in Albania
1.2 Factoring in EU countries
1.3 Factoring in the world
1.4 The traditional factoring and factoring documents online
1.5 Objectives of the study
1.6 Factoring towards financing loans
1.7 Leasing
1.8 The importance of factoring
CHAPTER II LITERATURE REVIEW
2.1 An overview
2.2 History of factoring
2.3 Factoring contract
2.4 Factoring contarct and discount bills
2.5 Participating parties to the contract
2.6 Factoring vs credit accounts receivable
2.7 Companies that can benefit from factoring
CHAPTER III METHODOLOGY
3.1 Introduction
3.2 Avantages of factoring
3.3 Why you choose factoring company?
3.4 Legal environment
CHAPTER IV ANALYSIS OF RESULTS
4.1 Arguments
4.2 Risk menagement in factoring
CHAPTER V CONCLUSIONS AND RECOMMENDATIONS
5.1 Conclusions
5.2 Reccomandations
Research Objectives and Themes
The primary objective of this work is to examine factoring as an effective, alternative financing method for small and medium-sized enterprises, specifically analyzing its role in addressing liquidity challenges and its comparison with traditional bank lending models.
- The mechanics and operational process of factoring services.
- Comparative analysis of factoring costs versus traditional debt financing.
- The impact of legal environments and national regulations on factoring practices.
- Risk management strategies employed by factoring companies.
- Factors influencing the selection and evaluation of a factoring provider.
Excerpt from the Book
1.1 Factoring in Albania
Factoring activity is an industry that is supervised by the Bank of Albania, although factor may be the bank or established under company law. This decision by the government, which envisions no changes in the current law. 9630, dated 30.10.2006 "On factoring". One of the main changes made to the factoring law is that all entities that have as their object the activity of factoring will be monitored and their activity will be regulated by the Bank of Albania, in accordance with the provisions of the law "On banks in the Republic Albania "and bylaws be approved for this purpose. In Albania there are eight commercial banks that are licenced from BoA to operate as factoring companies, as well as four national private non-banking financial companies.
They are also licensed three private international companies but for now most of their turnover is realized by operating only as a debt collection agency, after having encountered many problems with the fiscal and banking legislation. To assist factoring companies, to obtain information about loans, the Bank of Albania in its website publishes in the credit registry. Credit Registry an electronic database of identification and financial data of persons (their credit exposures in banking and/or financial system), applying for a loan at a bank, branch of a foreign bank licensed by the Bank of Albania or other lending institutions. This register will be used by any party that is involved in a factoring contract. Given the favorable environment for the emergence and development of factoring, many banks in Albania have taken the first step in creating the factoring department, and have gone on to secure a license from the Bank of Albania and starting to offer this financial service clients them.
Summary of Chapters
CHAPTER I INTRODUCTION: This chapter introduces the context of the 2008 economic crisis and analyzes the rising relevance of factoring as an alternative financing solution for small and medium-sized enterprises, particularly in the Albanian and global markets.
CHAPTER II LITERATURE REVIEW: This chapter provides a historical overview of factoring, defines key contractual concepts, and differentiates factoring from traditional credit and invoice discounting.
CHAPTER III METHODOLOGY: This section explores the structural classification of factoring products and evaluates the specific advantages and selection criteria for choosing a factoring company.
CHAPTER IV ANALYSIS OF RESULTS: This chapter investigates the practical aspects of factoring, including bill collectibility, risk management strategies, and financial implications for both the factor and the client.
CHAPTER V CONCLUSIONS AND RECOMMENDATIONS: This final chapter synthesizes the research findings, highlighting factoring as an ideal funding form for businesses with specific needs and recommending further policy support.
Keywords
Albania, Factoring, Services, Financial Institutions, Working Capital, Liquidity, Debt Financing, Risk Management, Commercial Law, Small and Medium Enterprises, Accounts Receivable, Credit Assessment, Factoring Contract, Business Financing, Collateral.
Frequently Asked Questions
What is the core focus of this research?
The research focuses on analyzing factoring as a practical financial instrument for small and medium-sized companies to generate working capital, especially in environments where traditional bank loans are constrained or difficult to obtain.
What are the central themes discussed in the work?
The core themes include the definition and history of factoring, the distinction between factoring and standard credit, the role of legal environments, risk management processes, and the strategic criteria for businesses selecting a factoring partner.
What is the primary objective of this study?
The main objective is to provide evidence of the benefits of factoring as a financing method and to present a clear comparison between factoring and other funding models, such as bank loans.
Which scientific methods are applied in this work?
The study utilizes a descriptive and comparative research approach, relying on literature reviews, data analysis of financial instruments, and a conceptual evaluation of legal frameworks and operational factoring processes.
What content is addressed in the main body?
The main body examines the legal, operational, and financial aspects of factoring, including detailed breakdowns of cost structures, the "due diligence" process, collateral interests, and the management of risks such as fraud and debtor insolvency.
Which keywords characterize this work?
Key terms include factoring, liquidity, working capital, credit assessment, risk management, accounts receivable, and small and medium-sized enterprises (SMEs).
What role does the Bank of Albania play in the local factoring industry?
The Bank of Albania acts as the regulatory body that monitors entities engaging in factoring, ensuring they operate in accordance with banking laws and providing access to credit registries for registered factoring contracts.
Why does the author differentiate between factoring and bank loans?
The author highlights that while bank loans rely on stable collateral and rigorous creditworthiness assessments, factoring is based on the quality of the receivables themselves, providing a more flexible and faster alternative for growing companies.
- Arbeit zitieren
- Arjeta Hallunovi (Autor:in), 2019, Factoring as a new service in the financial industry, München, GRIN Verlag, https://www.grin.com/document/492643
