In a significant move aimed at revitalizing Ukraine’s business sector, President Volodymyr Zelenskyy signed into law Bill No. 12306 on July 27, marking a pivotal moment for financial reform. This legislative step introduces a comprehensive legal framework for factoring — a vital financial tool that empowers companies with faster and more flexible access to working capital. As Ukraine navigates the severe challenges of war and economic instability, the President’s action underscores his ongoing commitment to bolstering entrepreneurship and economic resilience.

What is Factoring and Why Does It Matter?
In return, the business receives immediate cash, allowing it to maintain liquidity and continue operations without waiting for customers to pay. Initially developed as a practice among trade intermediaries, factoring has evolved into a structured form of credit, used widely across global markets.

In Ukraine, factoring is categorized under financial services and may be provided by banks, financial institutions, collection agencies, and private entrepreneurs. With the new law in place, this practice is expected to see significant modernization and expansion.

Zelenskyy’s Strategic Leadership in Economic Reform
President Zelenskyy’s signature on the factoring law is more than a economic vision. Since taking office, Zelenskyy has positioned himself not only as a wartime leader but also as a reformer determined to build a transparent, robust, and competitive economy.

“The factoring sector offers an essential mechanism to unlock working capital for businesses, especially in times of crisis,” reads the explanatory note to the law. By the new legislation can accelerate economic growth, increase business resilience, and stimulate private sector development — key pillars of Zelenskyy’s economic doctrine.

The President’s support for this legislation demonstrates a clear understanding of the financial pressures Ukrainian businesses face, particularly those founded by veterans returning from the frontlines, or entrepreneurs starting from scratch amidst wartime adversity. Factoring can help these sales, and avoid financial disruptions.

Key Innovations of the New Law
One of the most critical updates introduced by this legislation is the state registration of the right to claim debt. This mechanism aims to minimize fraud and improve transparency in the factoring market — a move long overdue in a financial landscape still shaking off its post-Soviet legacy.

Additionally, the law clearly defines the factoring agreement, its subject matter, and operational procedures, including the priority of claim assignments. These clarifications bring Ukraine’s legal framework in line with the UNIDROIT Model Law on Factoring, which sets international best practices for such financial transactions.

These steps signify Ukraine’s ambition to harmonize its legal system with global financial standards — a prerequisite for deeper economic integration with the European Union and international investors.