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On June 28, 2024, the State Bank of Vietnam issues Circular No. 20/2024/TT-NHNN prescribing factoring and other services related to factoring of credit institutions, and foreign bank branches.
The factor may not provide factoring for receivables in the case, including:
- Arise from goods purchase and sale or service provision contracts banned by law.
- Arise from goods purchase and sale or service provision contracts with remaining terms of the receivable of 01 year or more counting from the date of receipt of a request for factoring.
- Arise from goods purchase and sale or service provision contracts containing an agreement that contractual rights and obligations may not be transferred.
- Arise from service provision contracts in the field of finance, banking or insurance under the Prime Minister’s regulations on the system of Vietnam’s economic sectors.
- Have been factored or have been used to secure other debt obligations (unless the factoring amount shall not exceed the value of the receivable after deducting the portion that has already been factored and used to secure other debt obligations).
- Have become overdue for payment under goods purchase and sale or service provision contracts.
- Are involved in disputes in the performance of contracts for goods purchase and sale or service provision.
Besides, factoring methods include:
- Single factoring: The factor and client shall carry out factoring procedures and sign a factoring contract upon each factoring.
- Limit-based factoring: The factor shall determine and agree with the client on a maximum factoring debt limit to be maintained in a certain period and on the use of this limit. At least once every year, the factor shall consider re-determining this limit and its maintenance period.
- Syndicated factoring: Two or more factors jointly provide factoring for one or several receivable(s), with one of them acting as the focal point in organizing syndicated factoring.
