Creating a Factoring Service Specifically Designed for Small and Medium Enterprises at Pro Credit Bank in Kosovo

Abstract

Over the course of ten years, Kosovo has implemented policy reforms and worked on establishing a diverse market economy. As a result, small and medium enterprises (SMEs) in Kosovo have experienced significant growth and have played a crucial role in generating employment opportunities, boosting the country's GDP, and increasing the volume of exports. Nevertheless, small and medium-sized enterprises (SMEs) have encountered obstacles in their path to growth as a result of their limited management expertise and financial means, as well as the unpredictability of the business landscape. Consequently, small and medium-sized enterprises (SMEs) frequently encounter challenges during their business activities. The creation of new financial services is of utmost importance, particularly for joint-stock commercial banks in Kosovo, as they face less competition compared to state-owned commercial banks. This need arises from Kosovo's integration and economic development requirements, particularly in the banking sector. Furthermore, factoring is a financial instrument that fulfills the criteria of both commercial banks and small and medium-sized enterprises (SMEs). This study aims to propose the implementation of factoring services as a highly efficient and valuable short-term financial instrument for small and medium enterprises (SMEs) in Kosovo. Additionally, it highlights the significance of factoring services for commercial banks in the region. The primary goal of the first chapter is to provide an introduction to factoring services, as well as a clarification of the conditions necessary for their development. The second chapter provides an overview of the current global factoring industry and the specific market conditions in Kosovo, in order to gain insight into the general conditions for the development of factoring services for Kosovo-based factors. The Kosovo factoring market is currently in its early stages of development. There are significant opportunities for the growth of this service in Kosovo, particularly for pioneers introducing it to the market. Unfortunately, PRO CREDIT BANK was unable to capitalize on being the first to enter the market. Despite the benefits of PRO CREDIT BANK in accessing reliable and high-growth external sources of the Kosovo economy, The small and medium-sized enterprises (SMEs) in Kosovo have had a significant growth rate of 3.8%. PRO Loans Bank has a strong track record of providing financial services to SMEs, which are its main customers. The bank has also established successful partnerships with international and global organizations to get additional capital for loans.