From July 01, 2024, What are the Conditions for Factoring for Customers? How to Ensure the Factoring Activities?
What are the factoring conditions for customers effective from July 1, 2024?
Based on Article 11 of Circular 20/2024/TT-NHNN, the conditions for factoring for customers include:
(1) For factoring for the seller:
- In the case the seller is a resident with a repayment commitment:
+ Has full civil legal capacity and civil act capacity as prescribed by law;
+ Has a lawful purpose for the use of the capital;
+ Has the financial ability to repay the debt;
+ Has a feasible capital use plan;
- In case the seller is a resident without a repayment commitment and the buyer is a resident, the buyer must meet the conditions at point a, clause 1, Article 11 of Circular 20/2024/TT-NHNN.
- In case the seller is a resident without a repayment commitment and the buyer is a non-resident, the buyer must meet the conditions at point a, clause 1, Article 11 of Circular 20/2024/TT-NHNN and one of the following conditions:
+ The buyer is an enterprise established and operating abroad with Vietnamese enterprise's capital contribution in the form of investment specified at points a, c, clause 1, Article 52 of Investment Law 2020 or other forms of investment specified at point d, clause 1, Article 52 of Investment Law 2020;
+ Part or all of the receivable value is guaranteed for payment by a third party who is a credit institution, a foreign bank branch, a foreign credit institution, or insured by a third party, or guaranteed by the customer’s and/or third party's funds at the factoring unit.
If the receivable is only partially guaranteed or insured, the maximum factoring amount is the total guaranteed or insured receivable value;
- In case the seller is a non-resident with a repayment commitment, the seller must meet the condition at point a, clause 1, Article 11 of Circular 20/2024/TT-NHNN and one of the following conditions:
+ The seller is an enterprise established and operating abroad with Vietnamese enterprise’s capital contribution in the form of investment specified at points a, c, clause 1, Article 52 of Investment Law 2020 or other forms of investment specified at point d, clause 1, Article 52 of Investment Law 2020;
+ Meets the conditions at sub-point (ii) point c, clause 1, Article 11 of Circular 20/2024/TT-NHNN;
- In case the seller is a non-resident without a repayment commitment, the buyer, who is a resident, must meet the conditions specified at point a, clause 1, Article 11 of Circular 20/2024/TT-NHNN.
(2) For factoring for the buyer:
- The buyer, who is a resident, must meet the conditions specified at point a, clause 1, Article 11 of Circular 20/2024/TT-NHNN;
- The buyer, who is a non-resident, must meet the conditions at point c, clause 1, Article 11 of Circular 20/2024/TT-NHNN.
What are the factoring conditions for customers effective from July 1, 2024?
How is the assurance for the factoring operation?
Based on Article 13 of Circular 20/2024/TT-NHNN, the assurance for the factoring operation is defined as follows:
(1) The application or non-application of assurance measures is agreed upon by the factoring unit and the customer.
The agreement on the assurance measures between the factoring unit and the customer must comply with the regulations on secured transactions and relevant legal provisions.
(2) The customer and the guarantor must cooperate with the factoring unit to handle the assurance measure when there are grounds for handling according to the factoring contract, the agreement on assurance measures, and relevant legal provisions.
What are the methods of factoring?
Based on Article 8 of Circular 20/2024/TT-NHNN, the methods of factoring include the following payment methods:
Methods of factoring
1. One-time factoring: For each factoring, the factoring unit and the customer carry out the factoring procedures and sign the factoring contract.
2. Factoring according to the limit: The factoring unit determines and agrees with the customer on a maximum factoring debt limit maintained over a certain period and the use of this limit. At least once a year, the factoring unit reviews and reassesses the limit and the period for maintaining this limit.
3. Syndicated factoring: Two or more factoring units together perform the factoring agreement for one or several receivables, where one factoring unit acts as the lead organizer for the syndicated factoring.
Thus, from July 1, 2024, there will be three methods of factoring, including the following payment methods: One-time factoring; Factoring according to the limit; Syndicated factoring.
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