What is factoring?

The history of factoring dates as far back as the times of ancient Babylon or Phoenicia.
In those times many affluent owners used the services provided by a Factor-Agent, who on their behalf would sell goods to pre-arranged merchants. Very often Agents would pay their wealthy clients the expected sales profits before the transaction.
In official terms, however, factoring is a legal relationship that binds at least three entities:
Factor – purchaser of receivables, usually a bank or a specialized company.
Seller – an entrepreneur who under signed contracts sells, supplies goods or provides services against payment.
Debtor – a recipient, an entrepreneur obliged to pay for purchased goods or services. Such a contract has mixed legal-civil nature (due to mixing elements of various contracts, e.g. contract of mandate, assignment of receivables, sales), however its name does not appear in the civil code.
As a consequence, pursuant to Art. 353.1, admissibility of its conclusion results from the freedom of contract principle, and its content cannot contradict provisions of the civil code. It is an example of a contract drawn up for the purposes of business operation.

SBC team