Factoring as an Effective Accounts Receivable Management Tool – case study

Abstract

This paper presents important advantages of using factoring in a business practice. Payment backlogs often lead to bankruptcies. Factoring, understood as a tool that supports accounts receivable management, is a remedy to such financial problems. Nowadays, the factoring service has been gaining in popularity domestically and abroad, which is evidenced by its increasing value and the number of factors (third parties) in the country and abroad. Entrepreneurs are more and more willing to avail themselves of factoring, despite the costs involved. In the paper, the authors present factoring as an effective accounts receivable management tool, which ensures absolutely timely payments for goods or services they sold. Factoring ensures solvency to businesses and frees them from problems involved in paying their liabilities, helping them to focus on the core business. The XYZ company from the Polish media market is an example of a business using factoring services. Based on the description of its performance before and after factoring has been put in place, the authors assessed the usefulness of the service for accounts receivable management. Research methods include literature and case studies.