Author(s): Siraj Basha Mohammed, Podile Venkateswara Rao, Durga and Venkata Naga Siva Kumar Challa
Factoring is a continuous arrangement between a financial institution,(the factor) and a company ( the client), which sells goods and services to trade customers on credit. As per this arrangement, the factor purchases the client’s trade debts including accounts receivable either with or without recourse to the client and administers the sales ledger of his client. The growth of industrialization and increase in the production and sales ledger during recent times in India has led to the growing importance of timely collection of receivables and management of the same. In a buyer’s market, delay in collection of debts results in problems of working capital because of which the small suppliers with a limited finance raising capacity ultimately suffer. Delay or non- realization of dues has been responsible for the sick unit in the small – scale sector. Management of liquidity and liquid assets focuses on cash inflows and outflows along with a trade-off between liquidity versus investment of surplus cash in order to improve profitability The present paper highlights the short term liquidity of the select sample factoring services.