Kibo, Full-Scale Promotion of Accounts Receivable Purchase through Legalization of SME Factoring

Legal Basis Established with the Passage of the Technology Guarantee Fund Act Amendment in the National Assembly Plenary Session

[Asia Economy Reporter Kim Cheol-hyun] The Korea Technology Finance Corporation (Chairman Kim Jong-ho, hereinafter referred to as Kibo) announced on the 25th that it will actively promote the purchase of accounts receivable following the passage of the partial amendment to the Technology Finance Corporation Act in the National Assembly plenary session, which establishes the legal basis for 'non-recourse factoring for small and medium-sized enterprises (SMEs)'.

Through this legal amendment, SME factoring, confirmed as Kibo's exclusive business, is a system that allows SMEs with excellent technological and business feasibility to convert their accounts receivable into early cash without concerns about chain bankruptcies. Kibo purchases the sales companies' accounts receivable under non-recourse conditions, provides funds, and collects payment from the purchasing companies on the settlement date, offering a short-term financial service.

In SME factoring, even if the purchasing company goes bankrupt, Kibo does not claim repayment from the sales company. The sales company transfers the accounts receivable to Kibo for early cash conversion, which is not recorded as debt, thus helping secure financial soundness. Kibo was designated as an innovative financial service for 'non-recourse SME factoring' in July 2021 and has been operating the accounts receivable factoring business since June this year, before the legal amendment, planning to purchase a total of 40 billion KRW in accounts receivable within the year.

With this legal amendment, Kibo has added the SME factoring business to its exclusive operations alongside technology evaluation guarantees, guarantee-linked investments, and technology transactions and protection. An institutional foundation for stable business promotion has been established, and Kibo plans to gradually expand the supply amount so that the factoring system can become an alternative payment method to promissory notes.

Chairman Kim Jong-ho of Kibo stated, "In the complex economic crisis situation, Kibo will actively promote the ‘non-recourse SME factoring’ business so that SMEs can overcome liquidity crises by converting accounts receivable into early cash at low cost without concerns about chain bankruptcies and focus on their core business activities." He added, "We will continue to do our best to help SMEs overcome liquidity crises and successfully carry out government national tasks."

This content was produced with the assistance of AI translation services.