A new law on factoring has come into effect in Ukraine: what will change for business

All provisions of Law No. 4466-IX “On Factoring” have come into force in Ukraine, which for the first time comprehensively regulated the factoring services market. The document is designed to bring Ukrainian legislation closer to international standards, make the market more transparent, and simplify business access to financing for receivables.

What the new law changes

Factoring is now officially separated from ordinary cession (assignment of the right of claim) and collection activities. The law clearly defines which transactions are factoring transactions, and also establishes cases to which its effect does not apply.

Among the key innovations:

A Register of Assignments of the Right of Monetary Claim has been created, which should prevent the repeated sale of the same receivable;

contractual restrictions that prohibited transferring the right of claim to the factor without the consent of the buyer have been abolished;

digitalization of factoring transactions and electronic document management are provided for.
NBU tightens requirements for financial companies

At the same time, the National Bank of Ukraine updated the regulatory framework for financial companies.

In particular, factoring companies are required to implement a separate system for managing credit, operational and liquidity risks, ensure timely registration of claims, and adhere to international standards of internal audit and corporate governance.

What benefits will businesses receive

The new rules are expected to:

make factoring a more standardized financial service;
reduce legal risks when financing receivables;
strengthen control over the activities of factoring companies;
expand the opportunities for businesses to attract financing even in cases where contracts previously contained a ban on the assignment of claims.
No immediate effect expected

Despite the updated legislation, experts do not predict rapid growth in the factoring market. This is due to the need for financial institutions to adapt to new requirements, as well as the fact that factoring in Ukraine currently accounts for only about 0.5% of GDP and is inferior in popularity to traditional bank lending. At the same time, the new law eliminates a number of systemic barriers that have long hindered the development of this segment of the financial market.