Forfaiting and factoring as the means for handling transactions
2010
Mazure, G., Latvia Univ. of Agriculture, Jelgava (Latvia). Faculty of Economics. Dept. of Accounting and Finances
Forfaiting is a commercial finance technique that has attracted growing interest in both the banking and diversified financial sectors and the financial press of export oriented countries over the past years. It is certainly due to the fact that in many cases it has proven to be the most efficient and profitable instrument when it comes to export finance. The nominal value of forfaiting instruments issued each year is now estimated to be around USD 9-11 billion. However, very little official statistical data have been published. Factoring in turn is one of the oldest methods of business financing in existence. The history of factoring dates back to the days of moneylenders in the middle ages. It has taken on a new life in recent years as a financing method for many businesses in the world. The paper explores historical and theoretical aspects of forfaiting and factoring as means for handling transactions with a particular emphasis laid on the dynamics of factoring. The research shows that the world factoring volume has grown at a rate of 82.98% over the period of previous 7 years. The largest increase is shown by Australia and Asia; however their share in the world factoring market equals only to 2.6% and 17.8% respectively. The study concludes that enormous volume differences exist between the member states, with, for example, the UK market being around 313 times bigger than Luxembourg market, and considerably larger than the markets in Cyprus, Switzerland, Hungary, Poland, and Denmark. The research is mainly based on the monographic descriptive method as well as the methods of analysis and synthesis.
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