Serbian companies rely on factoring more and more often

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    Serbian companies rely on factoring more and more often

    The owners of companies in Serbia are increasingly turning to the companies that deal with factoring, i.e. collecting future receivables, in order to get money for their services or goods delivered in advance, thus avoiding the practice of waiting for months for collection.

    Although the need for a factoring service has been present in the Serbian economy for years, the practice shows that local companies opt for hiring firms (factors) to collect future receivables only after they have already signed a sales contract and delivered their services or goods.

    Because of the inability to collect receivables after the sale of services or goods, firms often encounter financial problems and they cannot service their regular obligations, and due to the contracted “expensive” deals they become illiquid or, in the worst case, they go into receivership.

    According to the data of the Factoring Development Section of the Serbian Chamber of Commerce (SCC), the turnover of factoring in 2017 amounted to 607 million euros, which is 15 percent more than in 2016. These data, explains Vladimir Djordjevic of the Banking Association of the SCC, point to an increase in factoring services in Serbia.

    There is a big difference between the collection of receivables defined by the law and the “debt collection”. Factoring is a form of financing where a company that expects income (it has receivables), sells these receivables to a third party (Factor) and immediately receives the liquid assets necessary for its business operation.

    Izvor: RTV, Tanjug

    Foto: Pixabay

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