Factoring contracts gain force of executive document – Draft amendments to law adopted

The Government of Serbia has adopted the Draft Law on Amendments to the Factoring Law, which, as stated, regulates in detail the handling of collateral in the performance of factoring transactions, introduces the possibility that a factoring contract, if concluded in writing and certified by a public notary, has the force of an executive document, thereby contributing to improving the collectability of receivables in factoring transactions.

It is stipulated that during the term of the factoring contract, the receivable that is the subject of that contract cannot be terminated by offsetting between the assignor and the debtor, with the possibility of determining otherwise in the factoring contract, and an obligation has been introduced to record electronic invoices issued in the factoring transaction in the central factoring registry, which will be established by the Ministry of Finance within 18 months.

As eKapija has already written, one of the most significant innovations is the establishment of the Central Factoring Registry (CEF), which would provide a reliable system for recording assigned invoices, prevent double assignments and encourage investor confidence.

Supervision of factoring companies would be transferred to the Securities Commission, which would, according to the explanation, provide a more efficient and technologically advanced control mechanism.

The amendments also introduce a more precise definition of different types of factoring, including advance and reverse factoring, as well as a clearer framework for receivables due dates. Factoring contracts, if certified by a notary public, will have the force of an executive document, which would speed up collection and reduce the need for court proceedings.

The explanation also emphasizes the importance of digitalization, because documentation accompanying contracts will be able to be kept in electronic form, which will reduce costs and administrative burden. The conditions for issuing and terminating a license for the operation of factoring companies, as well as obligations in the event of bankruptcy, are also specified.

Vlada Republike Srbije

Government of Serbia

Draft Law on Amendments to the Factoring Law

Factoring Law

factoring