Refinancing receivables at trade enterprises

Abstract

Background. Short-term receivables occupy the significant share of current assets at enterprise of trade. The share of receivables in current assets amounted to 59.3 % as of 1 January 2016. Thus, a significant amount of funds accumulated in the commercial short-term receivables. If the company can not speed up collection of receivables, it may use refinancing of accounts receivables.
The aim of the article is to identify the possible methods of refinancing in Ukraine and investigate foreign experience in the management of accounts receivable.
Materials and methods. The article used a combination of methods and approaches that allow implementing the conceptual unity of research, namely the dialectical method of scientific knowledge, methods of synthesis and comparative method, system, institutional and statistical analysis method.
Results. Current accounts receivable – total receivables arising in the normal operating cycle or it will be paid within twelve months from the balance sheet date. The acceleration of the turnover of receivables or its refinancing should be used to reduce the need in current assets financing. It is feasible to refinance accounts receivable if the benefit from immediate getting money higher than to get them in time. The main forms of refinancing receivables at the present stage are factoring, forfeiting, bill discounting.
National commercial enterprises use factoring services rarely due to relatively high prices for factoring services. Classical factoring market development in Ukraine significantly hampered by the low level of investor confidence in the Ukrainian business and the low level of trust in banks, high capital costs and high risks of default by borrower obligations. The western banks (especially in Switzerland and the United Kingdom) widely use forfeiting operations but only several banks offer such service in Ukraine.
Conclusion. At the present stage of economic development, trade enterprise of Ukraine can use in addition to traditional resources of financing current assets (accounts payable, short-term bank credit) – factoring, forfeiting, bill discounting. In Ukraine, as a rule, refinancing receivables using factoring or forfeiting, are not widely used by businesses due to the high cost of services.