FACTORING MANAGEMENT ON THE BASIS OF FORMATION OF OPTIMIZING FACTORING PORTFOLIO OF TRADE ENTERPRISES

Authors

  • I. Farynovych «Lviv Polytechnic» National University
  • Kh. Danylkiv «Lviv Polytechnic» National University
  • M. Lapishko «Lviv Polytechnic» National University
  • V. Havran «Lviv Polytechnic» National University
  • I. Zhyhalo «Lviv Polytechnic» National University

DOI:

https://doi.org/10.18371/fcaptp.v4i35.221833

Keywords:

factoring portfolio, trading enterprises, transformational changes, factoring management, debt relations between enterprises, profit maximization

Abstract

The article is devoted to the study of the effectiveness of factoring management as an innovative product based on the formation of the optimization factoring portfolio of trade enterprises, which will serve as a basis for management decisions on the implementation of this service in business.

As a result of the research a number of conclusions and methodical recommendations of practical direction are formulated. The formation of the optimization factoring portfolio is based on the principles of the CAPM portfolio investment model proposed by W. Sharp. The conditions for the formation of portfolio investments, which are reflected in the price model of the capital market, were adapted to the formation of the factoring portfolio. The key conditions of the factoring agreement are: limits on credit risk and a given level of income, that is the company must choose a portfolio with the maximum profitability, which is achieved by minimizing the cost of this service; seek to increase the funding limit for debtors; to remove from the portfolio of debtors of the enterprise with a high risk of non-repayment of debt.

We propose to determine the debtors of the enterprise that will form the optimization factoring portfolio through the variables x1 xn. When x = 1, the debtor is added to the factoring portfolio, and if x = 0, then it is necessary to exclude the debtor from the portfolio. In the language of factoring regression agreements, you can use a continuous linear programming problem in which the variable x will be in the range from 0 to 1, that is funding limits for debtors can be broken.

The target function of the factoring portfolio of commercial enterprises is proposed both for «invoice-discounting» (only receivables financing) and for «full factoring», that is full-fledged factoring (the use of additional related factoring services).

The profitability of the enterprise from factoring operations depends on the number of debtors in the factoring portfolio. The greater the number of debtors in the portfolio, the higher the profitability of the company from factoring. However, the company needs to consider debtors with high credit risk in order to minimize the non-repayment of receivables. Therefore, debtors with the highest credit risk of factoring should be excluded from the factoring portfolio.

To assess the economic efficiency of factoring management of trade enterprises on the basis of the formed optimization factoring portfolios, we propose to use the Cronbach & Gleser method.

The proposed proposals for the management of factoring of commercial enterprises, which is based on the formation of factoring portfolios, will regulate debt relations between enterprises with the involvement of third parties, that is, to prevent the occurrence of negative phenomena in the debt relations between commercial enterprises in the future, as well as will help maximize profits in the studied business entities.

Further research will focus on adapting the factoring portfolio of commercial enterprises to changes in the value of financial resources under the influence of transformational changes in the economy.

Author Biographies

I. Farynovych, «Lviv Polytechnic» National University

Ph. D. in Economics, Senior Lecturer of the Finanсe, Account and Analysis Department

Kh. Danylkiv, «Lviv Polytechnic» National University

Ph. D. in Economics, Associate Professor of the Finanсe, Account and Analysis Department

M. Lapishko, «Lviv Polytechnic» National University

Ph. D. in Economics, Professor of the Finanсe, Account and Analysis Department

V. Havran, «Lviv Polytechnic» National University

Ph. D. in Economics, Associate Professor of the Organizational Management Department

I. Zhyhalo, «Lviv Polytechnic» National University

Ph. D. in Economics, Senior Lecturer of the Organizational Management Department

References

Factors Chain International. (n. d.). Retrieved from https://fci.nl/en/industry-statistics?language_content_entity=en.

Natsionalna komisiia, shcho zdiisniuie derzhavne rehuliuvannia u sferi rynkiv finansovykh posluh. (2020). Ohliad rynkiv finansovykh posluh [Overview of financial services markets]. Retrieved from https//www.nfp.gov.ua/ua/Ohliad-rynkiv.html [in Ukrainian].

Vasylchyshyn, O. B., & Hrynchak, N. Ya. (2010). Faktorynh yak perspektyvnyi napriam rozvytku bankivskoho biznesu [Factoring as a promising direction of banking business development]. Visnyk Universytetu bankivskoi spravy Natsionalnoho banku Ukrainy — Bulletin of the University of Banking of the National Bank of Ukraine, 2 (8), 162—169 [in Ukrainian].

Verkhovna Rada Ukrainy. (2006). Konventsiia UNIDRUA «Pro mizhnarodnyi faktorynh» [UNIDROIT Convention on International Factoring]. Zakonodavstvo Ukrainy — Legislation of Ukraine. Retrieved from http://zakon.rada.gov.ua/laws/show/995_210 [in Ukrainian].

Lepokhin, O. V. (2011). Faktorynhovi operatsii yak instrument upravlinnia debitorskoiu zaborhovanistiu pidpryiemstva z metoiu zabezpechennia svoiei zhyttiediialnosti [Factoring operations as a tool for managing receivables of the enterprise in order to ensure its viability]. Teoretychni i praktychni aspekty ekonomiky ta intelektualnoi vlasnosti — Theoretical and practical aspects of economics and intellectual property, Vol. 2, 120—127 [in Ukrainian].

Levchenko, N. M., & Kravchenko, G. V. (2009). Faktorynh yak instrument efektyvnoho upravlinnia debitorskoiu zaborhovanistiu pidpryiemstv [Factoring as a tool for effective management of receivables of enterprises]. Ekonomichnyi prostir Economic Space, 23/2, 242—251 [in Ukrainian].

Kovalova, T. V. (2011). Pro dotsilnist faktorynhu v suchasnykh umovakh [On the feasibility of factoring in modern conditions]. Problemy i perspektyvy rozvytku bankivskoi systemy Ukrainy Problems and prospects of development of the banking system of Ukraine, Vol. 33, 135—139 [in Ukrainian].

Moroz, E. H., & Hrysiuk, I. V. (2010). Ekonomichni osoblyvosti zastosuvannia faktorynhu v Ukraini [Economic features of factoring in Ukraine]. Problemy ratsionalnoho vykorystannia sotsialno-ekonomichnoho ta pryrodno-resursnoho potentsialu rehionu: finansova polityka ta investytsii — Problems of rational use of socio-economic and natural resource potential of the region: financial policy and investments, 3, 47—57 [in Ukrainian].

Herasymovych, A. M., Alekseienko, M. D., & Parasii-Verhunenko, I. M. (2004). Analiz bankivskoi diialnosti [Analysis of banking]. Kyiv [in Ukrainian].

Volokhova, L. F., & Zakharenko, V. V. (2016). Analiz efektyvnosti faktorynhovykh operatsii u komertsiinykh bankakh [Analysis of the effectiveness of factoring operations in commercial banks]. Visnyk ONU imeni I.I. MechnykovaBulletin of ONU named after I. I. Mechnikov, Vol. 8 (50), 98—101 [in Ukrainian].

Vnukova, N. M., Opeshko, N. S., & Kolodizieva, S. O. (2012). Udoskonalennia orhanizatsii faktorynhu v banku za lohistychnym pidkhodom [Improving the organization of factoring in the bank on a logistical approach]. Finansy Ukrainy — Finance of Ukraine, 5, 68—77 [in Ukrainian].

Kolodizieva, S. O. (2014). Metodychnyi pidkhid do pidvyshchennia efektyvnosti upravlinnia posluhoiu faktorynhu [Methodical approach to improving the efficiency of factoring service management]. Visnyk Odeskoho natsionalnoho universytetu imeni

I. I. Mechnykova — Bulletin of Odessa I. I. Mechnikov National University, Vol. 2/5, 44—46 [in Ukrainian].

Makarovych, V. K. (2013). Analiz efektyvnosti faktorynhovykh operatsii yak instrumentu upravlinnia oborotnym kapitalom [Analysis of the effectiveness of factoring operations as a tool for working capital management]. Ekonomichnyi analiz Economic Analysis, Vol. 14, 3, 114—122 [in Ukrainian].

Stupnytskyi, O. I., & Koverda V. M. (2010). Suchasnyi faktorynh: efektyvnist torhovelnykh operatsii ta upravlinnia korporatyvnymy finansamy [Modern factoring: efficiency of trade operations and corporate finance management]. Kyiv: Vydavnycho-polihrafichnyi tsentr «Kyivskyi universytet» [in Ukrainian].

Bickers, M. (2003). Factoring in the UK. London: Sweet&Maxwell.

Forman, M., & Gilbert, J. (1976). Factoring and Finance. London.

Salinberg, F. R. (1984). A Guide to factoring. Practice and Law. Croydon: Tolley Publishing Company Ltd. Retrieved from http://www.fci.nl/home.

Sharpe, W. F. (1970). Portfolio Theory and Capital Markets. The Journal of Finance. New York.

Hilorme, T. V., & Shyshkina, A. Yu. (2015). Kontseptualni zasady efektyvnosti upravlinnia personalom pidpryiemstva [Conceptual principles of effective personnel management of the enterprise]. Ekonomika. Finansy. Pravo — Economy. Finances. Right, 7/1, 40—44 [in Ukrainian].

Schmidt, F. L., Hunter, J. E. (1998). The validity and utility of selection methodsin personnelpsychology: Practical and theoretical implications of 85 years of research findings. Psychological Bulletin, Vol. 124 (2), 262—274.

Downloads

Published

2020-12-24

Issue

Section

The topical questions about the development of finance, account and audit