Cases where banks in Vietnam shall reject providing factoring from July 1, 2024

Cases where banks in Vietnam shall reject providing factoring from July 1, 2024

The factoring provider is not allowed to factor receivables in the following cases:

• Generated from contracts for the sale and purchase of goods or the provision of services that are prohibited by law.

• Generated from contracts for the sale and purchase of goods or the provision of services with a remaining term of receivables of 01 year or more from the date of receiving the factoring request.

• Generated from contracts for the sale and purchase of goods or the provision of services with the agreement that transfer of rights and obligations under the contract is prohibited.

• Generated from contracts for the provision of services in the fields of finance, banking, and insurance as regulated by the Prime Minister concerning the System of Economic Sectors of Vietnam.

• Already been factored or used as collateral for other debt obligations (except in cases where the factoring amount does not exceed the value of the receivable after deducting the portion that has already been factored and used as collateral for other debt obligations).

• Payment overdue according to the contract for the sale and purchase of goods or the provision of services.

• Subject to disputes in the execution of the contract for the sale and purchase of goods or the provision of services.

More details can be found in Circular 20/2024/TT-NHNN effective in Vietnam from July 1, 2024.

Note: For factoring contracts signed before July 1, 2024 and in compliance with legal regulations at the time of signing, both the factoring unit and the customer may continue carrying out the signed contracts until the end of the contract term.

Amendments, supplements, and extensions to the such factoring contracts can only be made if the amendments, supplements, and extensions comply with the provisions of Circular 20/2024/TT-NHNN and other relevant legal regulations in Vietnam.

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