Factoring is a financial service involving the purchase and sale of existing, non-matured, or future short-term monetary receivables arising from the sale of goods or the provision of services domestically and internationally.

The subject of factoring can be any existing, non-matured, or future short-term monetary receivable, in whole or in part, arising from the sale of goods or the provision of services under an agreement between legal entities and entrepreneurs.

A short-term receivable is a receivable that becomes due for payment within one year from the date of the sale of goods or the provision of services, as defined in the sales or service agreement.

Participants in factoring include:

Assignor – the entity that sells its receivable from the debtor to the factoring company, arising from a contract for the sale of goods or the provision of services.

Factor – the entity that purchases the receivable from the assignor. It is a business entity organized as a joint-stock company or a limited liability company, headquartered in the Republic of Serbia, and authorized by the ministry responsible for financial affairs to conduct factoring operations.

Debtor – a business entity or entrepreneur headquartered in the Republic of Serbia, or entities headquartered abroad, registered in accordance with applicable local regulations.