The European Bank for Reconstruction and Development (EBRD) has opened a €25 million-equivalent dinar factoring facility with UniCredit Bank Serbia, expanding local-currency working-capital finance for Serbian companies as borrowing costs and operating expenses remain elevated.
The revolving facility is being provided under the EBRD’s Trade Facilitation Programme and will allow UniCredit to finance domestic receivables in Serbian dinars.
It is the first dinar disbursement under the EBRD’s factoring arrangement with UniCredit Serbia.
Factoring allows companies to sell or finance unpaid invoices before they mature, converting receivables into immediate cash and reducing the time businesses must finance customers from their own balance sheets.
The product is particularly relevant for small and medium-sized companies facing long payment periods from larger buyers.
The latest facility follows a similar RSD-denominated factoring programme with AIKBank, suggesting the EBRD is seeking to develop local-currency receivables finance as a broader segment of Serbia’s corporate funding market rather than as an isolated transaction.
Working capital becomes more important
Serbian companies are operating with higher nominal working-capital requirements than several years ago.
Wages, energy, transport and imported inputs have become more expensive, increasing the amount of cash businesses need to maintain the same level of production.
Companies supplying larger manufacturers, retailers or infrastructure projects can also wait weeks or months to receive payment after delivering goods or services.
That creates a financing gap.
Traditional working-capital loans can cover it, but they increase balance-sheet debt and require separate credit facilities.
Factoring instead finances specific receivables and can give companies earlier access to money they have already earned.
For fast-growing SMEs, that can be important because revenue expansion often increases cash requirements before it improves liquidity.
Dinar funding reduces currency mismatch
The local-currency structure is also significant.
Many Serbian companies earn most of their revenue in dinars but have historically borrowed heavily in euros or in loans indexed to the euro.
That creates exchange-rate exposure.
Serbia has maintained a relatively stable dinar, but borrowing in the same currency as operating income still reduces financial risk.
Dinar factoring therefore supports the broader policy objective of increasing use of local-currency financing.
That objective is also visible in Serbia’s sovereign market, where the government has been expanding access to dinar bonds and recently connected selected issues to Euroclear.
The two developments operate in different parts of the financial system but point in the same direction: deeper domestic-currency funding.
SMEs remain dependent on banks
Serbia’s corporate capital market remains relatively shallow.
Most small and medium-sized companies cannot issue bonds or equity economically and remain dependent on commercial banks for external funding.
That makes alternative bank-based products such as leasing, guarantees and factoring particularly important.
Factoring can be useful for suppliers embedded in automotive, food, retail, construction and industrial supply chains where payment terms from larger customers can create persistent liquidity pressure.
The credit risk can also differ from a normal corporate loan because the underlying receivable provides an identifiable source of repayment.
That can make factoring available in situations where a conventional unsecured working-capital facility would be more difficult or expensive.
Higher rates strengthen the case
The facility comes as corporate borrowing costs remain above the levels seen before the inflation cycle.
Higher interest rates increase the cost of carrying inventories and unpaid invoices.
That makes the speed of the cash-conversion cycle increasingly important.
A business paid after 90 days must finance wages, taxes, energy and materials during that period.
If interest rates rise, the cost of financing that gap rises as well.
Factoring cannot eliminate that cost, but it can shorten the period during which the company itself carries the receivable.
For suppliers operating on thin margins, that can materially improve liquidity management.
EBRD expands local-currency toolkit
The transaction also fits the EBRD’s wider strategy in Serbia.
The bank has been using commercial lenders to distribute financing to SMEs, green investments, young entrepreneurs and other targeted sectors.
Factoring adds a shorter-duration working-capital instrument to that mix.
The €25 million equivalent size is modest compared with Serbia’s overall banking market.
Its importance is more structural than macroeconomic.
If the facility generates sufficient demand, banks could expand factoring books further without requiring each programme to depend on development-bank funding.
That would make receivables finance a more routine part of corporate treasury management.
Supply-chain finance could deepen
Factoring also has implications for larger supply chains.
Major manufacturers frequently impose longer payment terms on smaller suppliers because they have stronger negotiating power.
The supplier then effectively finances part of the larger customer’s working capital.
Factoring transfers some of that burden to the financial system.
In sectors where Serbian suppliers are integrated into multinational production networks, this could reduce liquidity pressure without requiring customers to shorten payment terms.
It can also improve resilience when export orders are volatile.
A supplier facing weaker demand can still convert confirmed receivables into cash rather than waiting for payment while revenues decline.
That may become particularly relevant for automotive suppliers exposed to restructuring among European carmakers.
Credit risk still matters
Factoring is not risk-free.
Its value depends on the quality of the underlying invoices and the creditworthiness of the buyers expected to pay them.
Disputes over deliveries, contract performance or invoice validity can undermine the financing structure.
Concentration can also be a problem if a supplier depends heavily on one large customer.
Banks therefore still need strong credit controls.
The fact that the facility is denominated in dinars removes currency mismatch but does not eliminate commercial risk.
That distinction is important as the product expands.
A small transaction with wider implications
The immediate volume of €25 million equivalent will not materially change Serbia’s corporate credit market.
But the facility reinforces a broader trend toward more diversified local-currency financing.
For Serbian companies, the issue is increasingly not simply access to credit but access to the right type of credit.
Long-term investment loans finance equipment and expansion.
Leasing finances machinery and vehicles.
Factoring finances the gap between delivering goods and receiving payment.
As corporate borrowing costs remain elevated, that distinction matters more.
The EBRD-UniCredit facility gives Serbian companies another tool for managing liquidity without relying solely on conventional bank loans.
Its broader significance will depend on whether factoring develops from a niche product into a regular financing channel for Serbia’s SME and industrial supply chains.
