COMPARATIVE ANALYSIS OF THE CREDIT AGREEMENT AND FACTORING AGREEMENT

Abstract

The article is devoted to the consideration of the comparative analysis of the credit agreement and the factoring agreement, in particular, the main features of the concept, subject, parties of the credit agreement and the factoring agreement are highlighted. The common and distinctive features of the factoring agreement and credit agreement are analyzed in accordance with the legislation of Ukraine. It was established that the main advantages of the factoring contract are: cost and time savings, risk hedging, instant increase in the liquidity of the company of the business entity, which in turn leads to an improvement in the competitive position. Yes, the client has more freedom of action regarding future investments, as his equity ratio increases thanks to factoring. This, in turn, gives him the opportunity to quickly respond to market developments and take advantage of the discounts offered. The following benefits of a factoring agreement are security planning due to guaranteed claims, and the company's creditworthiness is strengthened through factoring and the associated balance sheet reduction. As a result, the company (client) constantly receives better conditions in relation to other possible loans. Thus, the company will be able to constantly improve its position in negotiations and strengthen its independence from banks. Factoring and practice loan contracts can be closely intertwined with insurance contracts. Recently, we are increasingly observing the situation regarding the active use of credit insurance in Ukraine and European countries. Credit insurance is an effective financial risk management tool that helps protect a company against losses incurred as a result of non-payment of commercial debts. One of the advantages of credit insurance is that it allows you to minimize the impact of the unforeseen non-payment of one or more customers on the company's solvency. Types of credit insurance include: financial, commodity, consumer credit insurance, as well as collateralized credit insurance, etc. During the period of martial law in Ukraine, residual credit (debt) insurance is increasingly used, it covers insured payments in the event of an emergency.