- May 10, 2026
- Posted by: АРОУ
- Category: Publications
In today’s business environment, assignment of claims and factoring transactions are becoming increasingly popular tools for managing accounts receivable and improving business liquidity. However, their use requires a clear understanding of legal regulations and compliance with Ukrainian legislation.
What Is Assignment of Claims?
Assignment of claims is a legal transaction in which a creditor transfers its right to claim a debt from a debtor to a third party.
This mechanism allows businesses to:
- receive funds more quickly;
- reduce financial pressure;
- transfer debt recovery risks to another party.
Key Legal Requirements for Assignment Agreements
Written Form of the Agreement
Under Ukrainian law, an assignment agreement must be concluded in written form.
Notification of the Debtor
The debtor must be officially informed about the change of creditor. Otherwise, the debtor may continue fulfilling obligations to the original creditor, creating additional legal risks.
Review of Restrictions in the Original Agreement
Many contracts contain clauses restricting or prohibiting assignment without the debtor’s consent. These provisions must be carefully analyzed before concluding the transaction.
Transfer of Rights and Obligations
The assignee receives all rights held by the original creditor at the moment of assignment.
What Is Factoring?
Factoring is a financial transaction under which a bank or financial company purchases accounts receivable from a business and provides immediate financing.
In practice, this allows a company to receive funds without waiting for payment from its counterparties.
Features of Factoring Transactions
Factoring Agreement
A factoring agreement must be concluded in writing and clearly define:
- the subject of the transaction;
- the scope of assigned claims;
- financing terms;
- payment procedures;
- liability of the parties.
Notification of the Debtor
As with assignment of claims, the debtor must be notified about the transfer of rights to the factor.
Recourse and Non-Recourse Factoring
Factoring may be:
- with recourse — where the client remains liable for non-payment;
- without recourse — where the factor assumes all risks of non-payment.
Confidentiality
Protection of commercial and financial information is an essential element of factoring agreements.
Advantages of Assignment and Factoring
Improved Business Liquidity
The company receives funds more quickly and can use them for business development.
Optimization of Accounts Receivable Management
Transferring receivables reduces administrative burden and allows businesses to focus on core operations.
Risk Reduction
In certain cases, non-payment risks are transferred to the factor or new creditor.
Main Legal Risks
Improper Documentation
Incorrectly drafted agreements may result in the transaction being declared invalid.
Disputes with Debtors
Failure to properly notify the debtor or violations of the original contract terms often lead to legal disputes.
Contractual Restrictions
If the original contract prohibits assignment, the transaction may result in litigation and financial losses.
Why Is Legal Support Important?
An experienced lawyer can:
- verify the legality of the transaction;
- prepare assignment and factoring agreements;
- assess potential risks;
- protect business interests;
- assist in negotiations and disputes with debtors.
Conclusion
Assignment of claims and factoring transactions are effective tools for managing business cash flows and reducing financial risks. However, their use requires proper legal structuring and comprehensive risk analysis.
The Ukrainian Bar and Realtor Association provides professional legal support for assignment and factoring agreements, as well as comprehensive assistance in debt recovery and financial transactions.
