Factoring as an effective working capital option. A critical review

Abstract

The purpose of this paper was to critically review the concept of factoring, with the view to ascertain it effectiveness in ensuring that organizations have access to enough liquid funds that facilitate the smooth running of their operation. Methodology _ the systematic quantitative assessment technique (SQAT) was used to identify and review relevant peer-reviewed journal and articles that had investigated factoring as a source of working capital. Findings based on a critical review of extant factoring scholarship, it was deduced that factoring has been effective enough to elicit a growing rate of adoption across the continent, despite the costs of adoption, as well as the 2009-2014 global financial crisis, excluding only North America where there seems to be a constant decline in adoption rate. Research limitations_ The use of limited but high quality academic database means that some articles we're not considered for this review. Originality value- The study is one of few studies to discuss the effectiveness of factoring as a source of working capital.