Empirical Estimates of the Lack of Liquidity and the Use of Factoring by SME in Albania

Shpresa Çela, Anila Bani

Abstract


A company may be profitable, but it may be classified as a failure if it fails to cash its money on time for its customers, necessary to pay off its suppliers and employees. For this reason , to make this company keep operating in the market, despite having a higher cost compared to other financial method, factoring is applied, a financial method that needs less time to have pays off but expensive for the business. For this reason, to analyze the lack of pay off as well as the readiness of the companies, using factoring as a short term financial source, we have done an empiric study of the Albanian Market, analyzing 110 SME (Small – Medium Businesses) which are active in different sectors of economy. But, do SMEs prefer the traditional ways of doing business? Do they appreciate that a third party be in between them and their supplier, being this a Factoring Company or a bank? In conclusion of this work, we have given in a form of recommendation the economic role of the factoring and the importance of its use during financial crises and post crises by the SMEs.

Key words: Supplier, Factor, Customer, Working capital.


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DOI: http://dx.doi.org/10.0001/(aj).v4i0.834

DOI (PDF): http://dx.doi.org/10.0001/(aj).v4i0.834.g1042

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