What are the requirements for factoring?

Circular 02 stipulates that a factoring entity shall review and decide on factoring when the customer meets the following conditions:

- For resident customers, specifically:

- The customer is a legal entity with civil legal capacity as prescribed by law;- The customer is an individual who is 18 years or older with full civil act capacity under the law, or from 15 years to under 18 years old without being deprived of or restricted in civil act capacity as prescribed by law;- The demand for factoring is to use the advance payment for lawful purposes and to serve production and business activities;- The customer has financial capability to repay the debt;- The customer has a feasible capital usage plan.

- For non-resident customers:

- The customer is an organization;- The demand for factoring is to use the advance payment for lawful purposes and to serve production and business activities;- The customer has financial capability to repay the debt;- The customer has a feasible capital usage plan.- In case the customer is an importer, the following condition must be met:

- The customer is a legal entity with civil legal capacity as prescribed by law;- The customer is an individual who is 18 years or older with full civil act capacity under the law, or from 15 years to under 18 years old without being deprived of or restricted in civil act capacity as prescribed by law;

and one of the following conditions:

- The customer is an enterprise established and operating abroad with contributions from Vietnamese enterprises in the form of direct overseas investment;

- 100% of the payment obligation is guaranteed, insured by a third party, deposited by the customer, or secured by the customer's deposit at the factoring entity.

See details Circular 02/2017/TT-NHNN effective from September 30, 2017.

-Thao Uyen-

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