DEBT TRANSACTIONS: REDUCING BAD DEBTS, ENHANCING LIQUIDITY
In the ever-changing economic landscape, debt management has become a pressing issue for many businesses and financial institutions. Debt transactions not only provide a solution for handling bad debts but also serve as a method to optimize cash flow and improve financial efficiency. However, to ensure smooth debt transactions, an essential factor is accurate debt valuation, which helps determine the actual value and minimize risks for all involved parties.
What are debt transactions?
Debt transactions involve transferring the right to collect debts from the seller to the buyer. These debts may include overdue loans or financial obligations held by banks, financial companies, or individuals.
This activity helps financial institutions, banks, and companies manage difficult-to-recover debts, reducing financial risks and improving the non-performing loan (NPL) ratio in financial reports. Additionally, debt transactions enable banks to maintain liquidity and focus on more profitable credit portfolios while creating opportunities for buyers to profit from debt recovery.
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