Companies' requirements have completely changed over the years and further changes are again expected to modify corporate trends.
The business manager, who traditionally took care of all aspects of the business - technical, management and operational - today feels the need to concentrate his energy and workload on the characteristic business. Following this strategy it is impossible not to apply for Factoring, in particular from the viewpoint of outsourcing and a more efficient rendering of liquid assets.
In Italy factoring contracts are now regulated by our legal system with Art. 1260 and following of the Civil Code and by the Law no. 52 dated 21.02.1991.
Furthermore, over the past few years factoring has been, either directly or indirectly, the subject of keen legislative and regulatory examination.
- Law 197 dated 5 July 1991 (money-laundering regulations)
- Law Decree 87 dated 27 January 1992 ((drawing up of balance sheets by financial bodies)
- Law 154 dated 17 February 1992 (transparency of financial operations)
- Law 385 dated 1 September 1993 (Consolidation Act of laws relating to banking and credit functions)
- Law 43 dated 13 January 1994 (regulating finance bills)
- CICR resolution dated 29 March 1994((regulating Risks and Prudential Supervision Centre)
- Law 108 dated 7 March 1996 (provisions regarding usury)
- Bank of Italy instructions dated 5 August 1996 (supervision of financial intermediaries registered in special lists)
- Law 675 dated 31 December 1996 (Use by banks of personal data and IT processing - Privacy)
Italian factoring now occupies a high position in this sector worldwide and this is thanks to its continued growth both in terms of amounts under management and the qualitative evolution of the products/services offered.
Within the EC factoring business is not entrusted to a particular regulatory body; due to its nature, it is however subject to the regulations covering credit and financial intermediation.
- EEC Directive 86/635 (Criteria for drawing up of balance sheets by financial intermediaries)
- EEC Directive 89/646 (Recognition of factoring business activity)
The abolition of restrictions regarding movement of capital, the European Common Market and economic globalisation have opened the way for new operational opportunities and new frontiers which mean that the factoring companies must commit to satisfying customer requirements which are increasingly more refined and demanding.
Factoring today is the only product on the financial market which is able to offer, within a single relationship, various services which efficiently address corporate needs in terms of management, insurance and financing of credits and this undoubtedly leads to the following advantages:
- Increased simplification of credit management, by reducing the number of relationships with customers;
- Increased flexibility of corporate organisation in respect of requirements stemming from business development;
- Replacement of the fixed costs of the internal structure handling management and credit collection with the variable costs regarding transactions;
- Optimisation of cash-flow;
- Guarantees against the risk of insolvency on the part of debtors;
- Improved professionality in credit management operations, with particular reference to assessment of debtors;
- Better quality of credit status information.
