introduction
As the only new typical contract in the civil code, factoring contract reflects that the state attaches great importance to the role of the factoring industry in helping enterprises develop. At the same time, many legal risks exposed in the vigorous development of factoring business in China can not be underestimated. The author attempts to discuss how the factoring people should prevent legal risks and seek relief after the event by briefly analyzing the high-frequency risk points in factoring business.。
Ⅰ
Current situation of factoring business: opportunities and risks coexist
Factoring business has developed for more than 20 years in China, and the clear definition of factoring in the formal law is "late" after the promulgation of the civil code. The so-called factoring contract refers to a comprehensive financial service contract signed between the factoring person and the creditors of accounts receivable, which integrates the collection, management, bad debt guarantee and financing of accounts receivable on the premise that the creditors transfer their accounts receivable. Factoring products organically combine the functions of accounts receivable management, collection, bad debt guarantee and prepayment, which can not only effectively reduce the bad debt risk of accounts receivable, but also significantly improve the efficiency of fund use, so as to improve the overall operating capacity of enterprises.
According to the report of China Banking Association, China has become the country with the largest factoring business volume in the world and the largest export factoring market in the world. The factoring business volume has led the world for the fourth consecutive year. In the first half of 2021, the factoring business volume of the member units of the factoring professional committee was equivalent to RMB 1.69 trillion, an increase of 204.28% compared with RMB 0.83 trillion in the same period of the previous year, indicating that the counter cyclical effect of China's factoring industry has emerged under the impact of the current epidemic, and there has been a restorative growth. With the general trend of "reducing leverage" of central enterprises and state-owned enterprises in recent years, and the establishment of Beijing stock exchange, high-quality innovative enterprises have more and more market space to seek factoring services and asset securitization of accounts receivable (ABS), and the prospect of factoring business is broader.
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Different from the traditional credit business, factoring is not a pure financing service, so the risk of factoring is not only derived from the credit risk of the financing subject, but also closely related to the qualifications, basic transaction background, and the quality of accounts receivable of the upstream and downstream entities of the supply chain. If you are careless, you will lose everything. Compared with other supply chain financial products, factoring financing has a large number of parties and transaction links, a long operation process, complex legal relations, and a large number of contract vouchers. It faces more severe operational and legal risks. Due to historical factors, the form of factoring with recourse is still in the majority in China at this stage, while the mainstream form of factoring in the world is non recourse factoring. In the future, China will further deepen its opening to the outside world and be in line with international standards. Non recourse factoring is bound to become a hot spot, which will put forward higher requirements for the ability of factoring to control and prevent risks.
Ⅱ
List of high-frequency legal risks faced by the factor
Due to the complex legal relationship and high uncertainty involved in the factoring business, the factor faces many risks. Based on numerous cases in this field in judicial practice, the high-frequency legal compliance risks faced by Chinese factoring mainly include:
This is the most important legal and compliance risk in the factoring business, which is mainly reflected in the examination of the authenticity and legality of the underlying transaction. In practice, the authenticity and legitimacy defects of basic transactions are generally manifested in fictitious basic transactions (such as the false transactions formed by "taking orders but not goods"), forged basic transaction materials (such as forged transaction contracts, forged bills, falsely issued VAT invoices, etc.), and the absence of receivable creditor's rights.
Although factoring of future accounts receivable is prohibited by banks, it is not prohibited by commercial factoring. Therefore, when commercial factoring enterprises carry out factoring and financing business with future accounts receivable as the subject matter (such as strategic purchase agreement, annual total order and other future accounts receivable basic contracts), they need to guard against the legal risk that the factoring legal relationship is not established due to the uncertainty of future accounts receivable.
In the "bill before factoring" business mode, the debtor has issued commercial acceptance bills and other bills when the factoring contract is signed; Some factoring persons do not review the underlying transaction documents and only carry out factoring financing business based on the payment claim of the notes. In this case, if the creditor and the debtor conspire to forge the basic transaction documents and then issue a commercial acceptance bill, it will bring many legal compliance risks to the factoring.
In commercial practice, there are many defects in the notice of assignment of creditor's rights sent by many factoring persons to the debtor, such as: (1) the identity of the factoring person is not indicated in the notice; (2) Failure to attach necessary vouchers for the transfer of accounts receivable; (3) The form of the attached necessary vouchers is illegal; (4) The notice shall be made only in accordance with the transfer registration of accounts receivable or through publication in the newspaper. In case of any dispute, the court may determine that the notice of assignment of creditor's rights does not have effect on the debtor on the basis of the above defects.
In the practice of factoring contract, the buyer and the seller often have mutual creditor's rights and mutual liabilities due to mutual transactions. If the buyer and the seller privately agree to offset the creditor's rights, it will undoubtedly affect the realization of the creditor's rights of the factoring person, thus giving birth to the corresponding legal risks.
In the litigation process caused by disputes arising from the performance of the factoring contract, the factoring person often faces the following risks: (1) the issue of jurisdiction, (2) whether the claim of the factoring person against the buyer's accounts receivable and the repurchase claim of the seller can be tried together in the case of suing both the buyer and the seller at the same time, (3) in the case of suing only the seller, if the court supports the claim of the factoring person, Whether the factor can sue the buyer separately. If the above problems can not be solved in the proceedings, they will directly affect the realization of the rights of the factoring person.
Ⅲ
How should a factor guard against and seek relief in the face of risks
Among the high-frequency risks mentioned above, the authenticity of accounts receivable has always been the most concerned topic in the factoring industry, because the common "dummy, false seal and false account" in reality often caught the factoring off guard. However, most risks can be resolved in advance if they can be checked carefully and "plan ahead".
For the factoring person, even if the accounts receivable are fictitious, as long as the debtor of the accounts receivable confirms the accounts receivable, the factoring contract is a true expression of intention, the content is legal, and does not violate the mandatory provisions of laws and administrative regulations, it should be recognized as valid. As a professional factoring institution, the factoring person should have a higher degree of business recognition and professionalism than the general market participants. Therefore, the factor is obliged to conduct necessary and prudent investigation and verification on the authenticity and legality of accounts receivable.
When handling factoring business, the factor shall examine the accounts receivable in terms of form and content. Formally, the debtor should be required to confirm the accounts receivable in a written manner that is not easy to generate disputes over the authenticity of seals or signatures; In terms of content, we should not only confirm the amount of accounts receivable and repayment period, but also confirm the true and reasonable existence of relevant transactions by reviewing transaction documents as far as possible.
Before entering into a factoring contract, the factoring person shall also review the credit, operation and financial status of the creditor and the debtor, and carry out effective due diligence on the underlying transaction and other relevant situations, focusing on the review of the counterparty, trading commodities and trade habits. In short, the review of the underlying transaction should not be limited to the written document of the underlying transaction contract, but should investigate the performance of the transaction in combination with the performance documents and field visits. So as to avoid the creditors and debtors from maliciously defrauding financing by falsely issuing invoices or forging transaction contracts, forging receipts, falsely reporting transaction amounts, making up logistics and payment collection documents.
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In view of the potential risk that the buyer and the seller privately offset the creditor's rights and affect the realization of the rights of the factoring person, when carrying out the factoring business, the debtor may be required to make a written commitment that there is no mutual debt with the creditor, and even if there is mutual debt in the future, it will also waive the right to claim offset from the creditor and the assignee of the creditor's rights.
Through the above series of pre loan due diligence and post loan verification, we can ensure that the factoring can trust the authenticity of the underlying transaction. After that, even if there are problems in the creditor's rights of accounts receivable, it still does not affect the recognition that the factoring has fulfilled its review obligations and the effectiveness of the factoring contract.
Once a lawsuit is brought, the factoring party should reasonably choose the litigation procedure, and generally can claim compensation from both the buyer and the seller at the same time in the legal relationship with recourse factoring; If the seller loses the ability to pay its debts, it can only bring a lawsuit against the buyer; If the accounts receivable are false or invalid, you can also choose to sue the seller and the guarantor only.
Conclusion
Looking forward to the future, it is the general trend for China's commercial factoring industry to be more strict in supervision and compliant in operation. With the continuous improvement of the legal and regulatory environment and the continuous improvement of the risk management ability of the factoring personnel, it is believed that the risks of the factoring business will be further resolved in the future. Before the relevant systems are mature, on the one hand, the factoring personnel can use big data to accurately portray users and improve the management ability of access, screening and monitoring of the accounts receivable to be financed; On the other hand, a law firm specializing in financial business can be hired to check the business and provide legal compliance advice for prevention in advance. In case of disputes, legal relief plans can also be provided in time.
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