The Improvement Of The Legal System For The Prevention And Control Of Credit Risk Of Commercial Factoring In China

The financing difficulty of small and medium-sized enterprises has been a long-standing problem in China,which has always affected the rapid development of small and medium-sized enterprises.As a counter cyclical low-risk trade financing tool,factoring business has a natural advantage in serving private enterprises and solving the financing difficulty of small and medium-sized enterprises,so it has a huge development space in China.In China,there are mainly commercial factoring companies and bank factoring organizations that carry out factoring business.Compared with the bank factoring organizations that mainly face large-scale enterprise customers,which have strict factoring business review,commercial factoring companies are more relaxed in many aspects such as customer access threshold,operation process,etc.,so they become the primary choice for SMEs to carry out receivables financing.However,in terms of the development of commercial factoring in practice,due to the short rise time of commercial factoring industry in China,commercial factoring companies generally lack the awareness of risk management,so in the process of enterprise operation and development,it is often unable to recover accounts receivable due to various reasons,causing many losses to the operation of commercial factoring companies.The key to the steady operation of commercial factoring industry is to grasp the risk control.In the industry,it is generally believed that commercial factoring companies are mainly faced with key risks such as credit risk,operational risk,liquidity risk and market risk.In practice,commercial factoring credit risk occurs frequently,which can be said to be one of themost important risks faced by commercial insurance companies.However,there are few provisions on commercial factoring in the current laws of China,which are currently open in China The development of factoring business is mainly based on the legal provisions of contract law on the transfer of creditor’s rights and the judicial regulations of factoring industry.There is a lack of special legislation in the field of factoring,so it is easy to produce conflict of legal provisions when dealing with factoring disputes.Especially for professional factoring companies,due to information asymmetry,imperfect credit evaluation system,and the complexity of the main body,the problem of credit risk in factoring industry is more prominent,so it is particularly important to establish a good legal order.Because of the limited space,the author only discusses how to control the credit risk of commercial factoring company by legal means.Based on the research results of current academic scholars on the credit risk of commercial factoring,combined with the current factoring laws and regulations in China and the upcoming <civil code(Draft)>,this paper analyzes the causes and specific performance of the credit risk of commercial factoring business through various dispute cases in the practice of commercial factoring companies,hoping to regulate it by improving the factoring laws and regulations.It will help the steady development of commercial factoring industry.