Factoring agreement

The rapid development of technology, economy, human relations and communication has brought development of trade with it, which is the basis of the sale of goods and services. The survival of small and medium- sized enterprises in commercial life made it necessary to support their assets with liquidity, and the SME sector sought new financial instruments in order to keep up with the major developments in the market. Companies that do not want to deal with the serious in-kind and personal collateral demands of banks and the formalities of the loan process, and that offer short-term services or sell goods, have started to compensate their severe liquidity needs with the factoring institution that offers attractive opportunities to commercial enterprises, and to sell their receivables from their customers to factoring companies. Our study consist of two main parts and a conclusion part, which are examined on the basis of doctrine, practice and precedents. In the first part, the factoring concept, the historical evolution of factoring on a global and national scale, its functions and types, and comparison with similar financing techniques, within the second part, factoring agreement, the parties of the factoring agreements, the controversial legal nature of the factoring agreement, the rights and obligations of the parties of the factoring contract and termination of factoring agreements are studied, in the conclusions part, the results of the study are presented together.