EBRD Opens €25 Million Dinar Factoring Facility With UniCredit Serbia

The European Bank for Reconstruction and Development (EBRD) has launched a €25 million-equivalent dinar factoring facility with UniCredit Bank Serbia, expanding access to local-currency working-capital financing for Serbian companies facing higher operating and borrowing costs.

The revolving facility operates under the EBRD’s Trade Facilitation Programme and enables UniCredit Bank Serbia to finance domestic receivables denominated in Serbian dinars. It represents the first dinar disbursement under the EBRD’s existing factoring arrangement with the Serbian bank.

Under factoring, companies can finance or sell unpaid invoices before their maturity, turning receivables into cash earlier and reducing the period for which they must fund customers from their own balance sheets.

The financing mechanism is particularly relevant to small and medium-sized enterprises (SMEs) that supply larger companies and often face extended payment periods.

EBRD builds local-currency factoring portfolio

The UniCredit facility follows a similar RSD-denominated factoring programme with AIKBank, indicating the EBRD is developing local-currency receivables financing as a broader component of Serbia’s corporate funding market.

Serbian companies now face higher nominal working-capital requirements than several years ago. Rising costs for wages, energy, transport and imported inputs have increased the amount of cash businesses need to maintain existing production levels.

Suppliers to large manufacturers, retailers and infrastructure projects can also wait weeks or months after delivering goods or services before receiving payment, creating a gap between revenue recognition and cash availability.

Conventional working-capital loans can finance that gap but add debt to company balance sheets and require separate credit facilities. Factoring instead is linked to specific receivables, allowing businesses to access cash generated through completed sales earlier.

For rapidly expanding SMEs, the distinction can be significant because higher sales volumes can increase cash requirements before they translate into improved liquidity.

Dinar financing limits foreign-exchange exposure

The facility’s local-currency denomination addresses another financing issue faced by Serbian businesses.

Many companies generate most of their revenue in dinars but have historically relied substantially on euro-denominated or euro-indexed borrowing, exposing them to currency movements.

Although the dinar has remained relatively stable, borrowing in the same currency as operating revenues can reduce this mismatch and associated financial exposure.

Dinar factoring therefore fits into the broader push toward greater use of local-currency financing in Serbia. A similar direction is visible in the sovereign debt market, where access to dinar-denominated government bonds has been expanded for international investors and selected issues have been connected to Euroclear.

The two initiatives concern different parts of the financial system but both support deeper domestic-currency funding.

Bank financing remains crucial for Serbian SMEs

Serbia’s corporate capital market remains relatively shallow, limiting the ability of most SMEs to raise financing through economically viable bond or equity issuance.

Commercial banks consequently remain the principal source of external funding, increasing the importance of bank-based instruments such as leasing, guarantees and factoring.

Factoring can provide working-capital support to companies operating in automotive, food, retail, construction and industrial supply chains, where payment terms imposed by larger customers can create recurring liquidity pressures.

Unlike a conventional corporate loan, factoring is based on identifiable receivables that provide a specific repayment source. This can make the instrument suitable in circumstances where an unsecured working-capital facility may be harder to obtain or more expensive.

Elevated borrowing costs increase liquidity pressure

The new facility comes as corporate financing costs remain above levels seen before the inflation cycle.

Higher interest rates raise the cost of holding both inventories and unpaid invoices, making the speed at which companies convert sales into cash increasingly important.

A company operating with a 90-day payment period, for example, must continue financing wages, taxes, energy and materials while waiting for its customer to settle the invoice.

As interest rates rise, the cost of maintaining that financing gap also increases. Factoring does not remove the financing cost, but it can reduce the period during which the supplier carries the receivable itself.

For businesses operating on thin margins, faster conversion of receivables into cash can therefore strengthen liquidity management.

EBRD adds short-term instrument to Serbia strategy

The transaction forms part of the EBRD’s broader financing activity in Serbia, through which the bank works with commercial lenders to support SMEs, green investments, young entrepreneurs and other targeted areas. Factoring expands that financing toolkit with a shorter-duration working-capital instrument.

At €25 million equivalent, the facility is relatively small compared with Serbia’s overall banking market. Its significance is instead linked to the potential development of receivables finance as a more established corporate funding channel. If demand is strong enough, commercial banks could increase their factoring portfolios without every expansion relying directly on development-bank funding, potentially making receivables finance a more regular element of corporate treasury management.

Factoring shifts part of supply-chain financing burden

The instrument also affects the financing dynamics between large buyers and smaller suppliers. Large manufacturers can impose longer payment periods on smaller suppliers because of their stronger negotiating position. This effectively requires the supplier to finance part of the larger customer’s working capital. Factoring moves some of that financing burden from the supplier’s balance sheet to the financial system.

For Serbian companies integrated into multinational production networks, the mechanism can ease liquidity pressure without requiring large customers to shorten their established payment terms. It can also provide additional resilience when export demand becomes volatile. Suppliers can convert confirmed receivables into cash instead of waiting for payment while their revenue position weakens. The mechanism may be particularly relevant for automotive suppliers affected by restructuring among European carmakers.

Invoice quality remains central to factoring risk

Despite its liquidity benefits, factoring remains dependent on the quality of the underlying receivables and the creditworthiness of the buyers responsible for payment. Disputes involving deliveries, contractual performance or invoice validity can weaken the financing arrangement. Concentration risk can also emerge when a supplier relies heavily on a single major customer.

Banks therefore continue to require effective credit controls when financing receivables. Dinar denomination eliminates the currency mismatch associated with euro or euro-indexed borrowing, but it does not remove the underlying commercial risk associated with the financed invoices.

€25 Million Facility Expands Corporate Financing Options

The €25 million-equivalent EBRD-UniCredit facility is not large enough on its own to materially alter Serbia’s overall corporate credit market. Its role is instead to broaden the range of local-currency financing available to businesses.

Different financing instruments address different corporate needs: long-term investment loans support equipment purchases and expansion, leasing can finance machinery and vehicles, while factoring provides liquidity between the delivery of goods or services and customer payment. With corporate borrowing costs remaining elevated, access to financing tailored to each stage of the cash cycle becomes increasingly relevant for Serbian SMEs and industrial suppliers.