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Issue № 80. June 2020

Application of Factoring in Small and Medium Enterprises and Digital Technologies Development

Ekaterina A. Panova

PhD, Senior Lecturer, Department of Finances and Credit, State University of Management, Moscow, Russian Federation. 
E-mail: k79@yandex.ru
ORCID ID: 0000-0002-5830-0087

Small and medium enterprises (SMEs) have financial difficulties more often than large companies. One of the reasons for this is dependence on cooperation with clients on terms of long delays in payments, that leads to the growth of unprotected current assets such as accounts receivable. Long waiting time for debt repayment can lead to interruptions in production processes, so factoring is especially useful for SMEs that often do not have well-established financial system and face delay in payments. In this study factoring is considered as a necessary economic solution that involves immediate cash generation when funds lack can have the detrimental effect on business. The methodological basis of the research includes the concepts of system, factor and statistics analysis. The proposed methodological framework aims to justify the significance of factoring as a tool helping to avoid financial resources lack, increase liquidity and overcome SMEs cash gaps. Although factoring is rather expensive financial product, it can be beneficial to SMEs due to availability to save money on servicing accounts receivable and to get financial resources when there is an urgent need for them. Thanks to the widespread using of computer technologies, the solution of the problem when funds are freezing in accounts receivable is increasingly moving to the online plane. However, the issue of SMEs involvement in e-finance requires attention from the state. A systematic approach to advantages, disadvantages and applicability of factoring, including its electronic channels, is of practical interest for SMEs.

Keywords

Factoring, small and medium enterprises (SMEs), financial technologies, financial resources, online-platforms.

DOI: 10.24411/2070-1381-2019-10067

Comments:
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