FACTORING AS A WAY OF FINANCING BUSINESS ACTIVITIES IN THE GLOBAL ECONOMY

Abstract

Factoring is a modern financial instrument created in the legal environment of common law, an instrument that, especially in Europe, has become a very accepted mean of financing, collection, securing collection and transfer of claims. The role of factor (factoring organization) can be performed by a commercial bank, insurance company, stock exchange and other consulting companies and clearing houses. Its main activity refers to the collection of those transferred to it, i.e. from the customer (client) of assigned claims. Therefore, the factor thereby accepts the obligation towards the client to make a payment in a certain percentage or in full in relation to the received invoice (or several of them) in exactly the stipulated terms. The legal aspect of factoring constitutes the factoring contract with its specific contractual features. A factoring contract is a contract of a mixed nature (mixed contract), which includes elements of several contracts, primarily assignment contracts and credit contracts, guarantee contracts, and performance contracts. The aim of this paper is to explain in more detail factoring as a way of financing business activities in the world economy. For this reason, the paper emphasizes, among other things, the three basic functions of factoring: the function of financing, the function of ensuring collection and the function of service, i.e. management with receivables, as well as its advantages and disadvantages. The European market is the most important global factoring market and represents over 2/3 of the world's factoring market. The share of factoring in the European GDP in 2022 was 12.3%, which speaks of the increasing importance of factoring in the overall European economy.