The use of factoring in business : a review and analysis of the local situation

Abstract

The main aim of this research is to gain an understanding of the effect and perception of factoring in the local context. The lifeblood of every business is cash and companies with a poor cash flow may go bankrupt even if they are very profitable. Factoring is designed to ease cash flow problems and is gaining popularity in Malta. Twelve companies that use factoring were selected and interviewed to represent the population. This qualitative study was set to gather an in-depth view of factoring in Malta. The four main areas investigated are: i. the awareness and reasons for going into factoring; ii. the Perception of factoring; iii. the type and extent of factoring in Malta; iv. results from factoring. This research gathered enough information to draw some conclusions on the present situation of factoring in Malta as well as some recommendations on what can be done to improve it. Areas for further study on the subject are also suggested.