An Assignment on Supply Chain Finance in Cambodia Legal Landscape

Understanding "Assignment" on Supply Chain Finance in Cambodia Legal Landscape

អនុប្បទានសិទ្ធិ

A guide to a key legal tool that unlocks cash flow for businesses in Cambodia by allowing them to get financing against their future income.

gavel

The Legal Foundation

The entire system is built on a solid legal rock: the Law on Secured Transactions (2007). This law modernizes and clarifies how businesses can use their movable assets as collateral.

Key Idea: This law explicitly covers the "sale of accounts," which is the legal term for what happens in factoring. It provides a clear, predictable framework for both businesses and finance providers, replacing older concepts with the modern, legally-defined "assignment."

swap_horiz

Purpose & Process of Assignment

The main goal is simple: turn unpaid invoices (accounts receivable) into immediate cash. This helps businesses manage their working capital without waiting for customers to pay.

storefront

Seller
has unpaid invoices from a buyer.

arrow_forward

assignment_turned_in

Assigns Invoices
to a Factor (finance provider).

arrow_forward

payments

Factor
provides immediate cash to the Seller.

Key Idea: Through a Factoring Agreement, the Seller legally assigns its right to collect payment to the Factor. The Factor then provides cash upfront and collects the full invoice amount from the Buyer later.

verified_user

Perfection, Priority & Protection

For an assignment to be legally solid against everyone (the buyer, other creditors, etc.), it must be "perfected." This process protects the finance provider's rights.

notifications_active

1. Notify or Get Consent

The seller must notify the buyer (Obligor) about the assignment, or the buyer must consent to it.

schedule

2. Use a Fixed-Date Document

This notice or consent must be on an instrument with a verifiable date to be valid against other third parties.

how_to_reg

3. Register with SETFO

File a notice with the online Secured Transactions Filing Office (SETFO) to establish public record and legal priority.

Priority Rule: If an invoice is assigned to multiple parties, priority is given based on who's fixed-date notice reached the buyer first. The SETFO registration is the ultimate proof of priority against the wider world.

public

The Broader Supply Chain Finance Context

Assignment is the legal engine behind a common type of Supply Chain Finance (SCF) known as "Receivables Purchase."

Key Idea: This is considered a "true sale" of the asset (the receivable). The Seller doesn't just borrow against the invoice; they sell it outright to the finance provider. This is formally documented in a Receivables Purchase Agreement (RPA), which is governed by Cambodia's Law on Secured Transactions.

rocket_launch

The Digital Frontier in Cambodia

While the legal foundation is strong, the future of supply chain finance is digital. Cambodia is making huge strides in this area, even if advanced SCF instruments are still emerging.

Key Idea: Cambodia's digital journey is led by the highly successful **Bakong system**, a blockchain-based payment platform. This, along with the "Digital Economy and Society Policy Framework 2021-2035," is building the infrastructure for future innovations. While complex blockchain-based trade finance isn't yet standard, the foundation is being laid for a digital-first financial future.

This infographic provides a simplified explanation for educational purposes. For specific legal or financial advice, please consult with a qualified professional.