| Factoring is a complete financial package that combines credit protection, accounts receivable bookkeeping, and collection services. It is an agreement between the factor and a seller. Under the agreement, the factor purchases the seller's accounts receivable, normally without recourse, and assumes the responsibility for the debtor's financial ability to pay. If the debtor goes bankrupt or is unable to pay its debts for credit reasons, the factor will pay the seller. When the seller and the buyer are in different countries the service is called international factoring.In the past three decades, the competition in international trade has become fiercer and fiercer, which expedites the international buyer's market's coming into being. In order to expand their sales, exporters have to offer more "buyer friendly" terms that means open account or at least D/A terms. International factoring is an essentially comprehensive financial tool designed for sales based on such terms. It can relieve exporters much of the time-consuming administrative burden of approving credit and collecting export sales, which lets exporters safely offer their foreign customers competitive open account terms. Under such circumstance, International factoring has become more and more popular in the world, and has expanded rapidly over the past thirty years. Factoring is rapidly becoming the modern business tool for growing companies. However, in China, it only has about ten years' history and experienced slow development. Many people in trade and finance don't know much about it. This kind of situation shows China lags behind in international factoring, which makes us can't keep up with the world trade developing pace. Therefore, it's urgent for China to quicken the establishment and employment of international factoring.With the development of this new business, follow the relevant legal problems. International factoring involves several parties such as exporters, importers and factors (in the two-factor system, we have export factor and import factor.), among whom exist complex relationships involving each party's rights and duties. The coreof international factoring is account receivables assignment, which is easy to bring many legal issues. The resolution of these problems need to deal with different country's regulations on law of obligation, guarantee law, bankruptcy law, etc. All of these show the complexity of the legal issues in international factoring and the significance of its study. This paper is composed of three parts and 5 chapters. After detailed introduce of international factoring, the paper mainly deals with the legal issues on it, and puts forward some suggestions.First part is something on international factoring practice. It uses two chapters to introduce the basic knowledge such as its origin and development, the different operating systems and their characteristics, the advantages and disadvantages to each party. Second part is something on international factoring law. The third chapter mainly discusses the legal relationship among parties involved and the two contracts deciding these relationships, and also discusses the risk existing in international factoring and risk control. The fourth chapter mainly deals with the legal issues on account receivables assignment that is the core of the whole international factoring. Usually, the resolution of many legal issues on international factoring will depend on the effectiveness of the receivables assignment. The third part, that is the last chapter, is some suggestions and conclusion. It introduces the present situation of China's international factoring, and analyses the main factors influencing China's factoring, and then puts forward some suggestions hoping to promote its development in China.Although the international factoring in China is still in an initial stage and suffers from many problems, I believe, with the efforts of all parties, it will be prosperous and play a more and more important role in China's foreign trade. |
PDF Full Text Request