The Execution of factoring as a modern financing method and its effect upon export in Turkey

Factoring can be described briefly as the sale of receivable right. It was started to be executed as a subsidiary service of a bank in 1988. It has been independently founded under the name of factoring in 1990. Factor, who executes factoring, buys a salesman's receivable right that is born as a result of the sale in exchange for a certain pay. In return for this payment, he collects the salesman's receivable and does accounting work. Depending on the salesman's wish, the factor facilitates financing by paying in advance as well as giving guarantee. For this service he demands an extra pay. Since execution of factoring throughout the world started ages ago, it has changed remarkably according to exigencies of the day. Buyers' demands and factors' facilities have played an important role in coming into being of these various executions. Nowadays various techniques similar to factoring have been also applied. However, factoring is superior to other financing techniques with its flexibility and less formalities. Although its execution in Türkiye is new, it has showed a rapid development. While the share of export factoring in total export was one per ten thousand in 1988, it increased to one percent in 1995. The volume of factoring transaction in Türkiye is increasing more rapidly than that of the world's. Nowadays it is expected that the volume of factoring will continue increasing because some absences in legislation has been completed and customs union has been signed. In Türkiye, as throughout the world, the volume of factoring transaction has been developing in favour of domestic factoring. Export factoring will develop more rapidly if it is included to the scope of incentive and exceptions. M