Banks as service providers of debt factoring : an evaluation

Abstract

Local service providers of debt factoring mainly consist of credit institutions. Accordingly, the objectives of this study endeavoured to seek what forms of factoring services are being supplied locally, what types of industries are targeted, and to scrutinise any benefits and risks associated with the supplying of this facility. Through the adoption of different research methodologies, the objectives of this study could be achieved. Various interviews were conducted with credit institutions which actually supply the factoring facility. To support these interviews, surveys were distributed via electronic mail to the remaining credit institutions classified as non-service providers. Since the interviews were conducted with high level managerial personnel, their opinions were held in high regard. A response rate of 38.9% from bank representatives completing the survey was achieved. In the circumstances, this was deemed adequate. Literature established that banks are not always the best service providers of debt factoring. From a local perspective, however, only credit institutions endeavour to supply such a service. Main findings established that all credit institutions perceive to provide forms of the factoring facility - those which do not provide this service declare that some existent constraints restrict them from supplying it. Some of the non-service providers do not exclude the possibility of introducing forms of this facility in the distant future. This is only a preview of what the study entails. Other aspects and implications regarding the debt factoring facility are further examined throughout this dissertation.