What is factoring?

Factoring is a financial instrument by which the factor – Serbian Export Credit and insurance Agency (AOFI) provides short-term financing for exporting companies based on non-matured (future), undisputed receivables arising from the sale of goods or services in the foreign and domestic markets.

Participants in factoring:

  • Factor – AOFI
  • Client (Assignor) – seller of goods or services who sells goods with diferred terms of payment and assigns its receivablas to factor
  • Debtor – Buyer of goods or services

Types of factoring business offered by AOFI:

  • International export factoring (through the one- and two-factor system)
  • Domestic factoring

Advantages of factoring:

  • Improvement of liquidity – faster collection of receivables by advance payment, ensuring the necessary funds for the payment of own liabilities and financing of production;
  • Improvement of creditworthiness and financial standing of the exporter without burdening the balance sheet positiion, and without registering in the Credit Bureau;
  • Improvement of the competitive position, both for buyers and suppliers, which allows the client to offer longer payment terms and sale of goods on open account;
  • Secured collection of receivables.

Who can use factoring:

  • Export-oriented companies with the annual turnover of EUR 100,000 or proportionate amount during the year, regardless of the company size;
  • Companies offering goods with deferred payment, or starting business with new buyers.
  • Companies with good multi-year programmes and high-quality buyers, but without sufficient working capital to finance longer collection periods;
  • Small and medium enterprises with insufficient resources and financial power for additional borrowings in the financial market;
  • Companies taking account of their own liquidity by increasing the speed and quality of collection and working capital for further investment, while reducing the costs of collection and possible losses;

How factoring works:

  • The exporter, after delivering the goods or providing the service, issues an invoice to the debtor.
  • The exporter delivers to AOFI a copy of the invoice with other accompanying (export) documents with a signed notification of assigned receivable given to the debtor.
  • After delivering all the documents, AOFI pays the advance payment in the amount of up to 95% of the nominal value of the assigned receivable, reduced by the costs of factoring commission.
  • After the buyer’s payment to the factor’s account, AOFI pays to the exporter the difference between the advance payment and the received payment. If specified by contract, the remainder of this amount may be used by AOFI for the settlement of the exporter’s due liabilities.
  1. The exporter delivers the completely filled in questionnaire for factoring with all other required documents listed alongside the questionnaire;
  2. AOFI analyses the creditworthiness of the debtors listed in the questionnaire and delivers an indicative offer with the list of acceptable debtors;
  3. Upon accepting the indicative offer, a proposal is prepared for the AOFI Executive Board, which makes the final decision;
  4. After the positive decision of the Executive Board, a factoring contract is signed;
  5. After the contract is signed and receivables are assigned for approved buyers, AOFI carries out the financing in accordance with your needs in foreign currency or dinars.



Price of factoring

  • Credit reports of debtors are the exporter’s cost which occur before the contract on international factoring is concluded, and which enables annual monitoring of debtors.
  • Factoring commission is a fixed cist defined in the contract for each debtor that is calculated and collected in the agreed percentage of the entire value of the assigned receivable – invoice when the advance payment is made;
  • Factoring interest – calculated monthly on advance payments made from the date of financing to the moment of payment by the debtor.

    Etiam magna arcu, ullamcorper ut pulvinar et, ornare sit amet ligula. Aliquam vitae bibendum lorem. Cras id dui lectus. Pellentesque nec felis tristique urna lacinia sollicitudin ac ac ex. Maecenas mattis faucibus condimentum. Curabitur imperdiet felis at est posuere bibendum. Sed quis nulla tellus.


    63739 street lorem ipsum City, Country


    +12 (0) 345 678 9