Financial Instruments – Factoring, Cession, Taxatio

Abstract

The article examines factoring and cession as financial instruments for short-term financing of companies experiencing liquidity difficulties, as well as their role in providing resources to achieve better liquidity. The subject of the study is to outline specific actions and capabilities used for collecting receivables from debtors, as well as the similarities and the differences between factoring and cession in their operating activity and their VAT treatment. The purpose of the paper is to clarify the place, role, and capacity of these instruments to release the working capital of companies “frozen by disloyal partners”, thereby enabling the reinvestment of the provided “fresh money” into their ongoing activities. The author’s thesis is to emphasize factoring and cession as financial instruments, stressing their role and significance for economic agents. They are applied to overcome financial difficulties and strengthen business performance.