THE ROLE OF FACTORING COMPANIES IN IMPROVING THE ECONOMIC ACTIVITIES OF BUSINESS PARTNER COMPANIES

Abstract

In facing the challenges of globalization and economic dynamics, entrepreneurs of various scales play an important role in improving the nation's welfare. Tight business competition encourages companies to provide optimal services, including ease of payment, even though this can slow down cash flow due to credit sales. In the midst of urgent operational needs, many companies need fast and efficient financing, such as that offered by non-bank financial institutions, especially factoring companies. Factoring helps small and medium-sized businesses get funds quickly, deal with credit management, and focus on production and sales. This practice is supported by Articles 28A and 28D of the 1945 Constitution and regulated by Presidential Decree no. 9/2009 and POJK no. 29/POJK.05/2014. This research aims to examine the role of factoring companies in improving the smooth economic activities of business partner companies. The approach method used is normative juridical, by reviewing library materials and secondary data related to relevant regulations and literature. Data was collected from primary, secondary and tertiary legal materials through library research and document study, then analyzed qualitatively using descriptive analysis methods. Based on the research results, it can be concluded that factoring companies have a significant role in encouraging economic growth by increasing liquidity, reducing credit risk, and increasing the operational efficiency of partner companies. Factoring company strategy in order to improve the smooth economic activities of business partner companies by offering flexible financing solutions, improving technology and innovation in services as well as carrying out training and human resource development