As in the most developed countries of Europe, as well as in every economic environment, factoring as repurchase of receivables plays an important role in financing the economy. In Croatia, it is a relatively young product that takes up a small part of the financial sector, and its development in our area can be related to occurrence of the recession. Increasingly, the illiquidity of manufacturers, traders, service providers and other business entities poses major challenges to their survival in the market, and factoring through short-term financing enables them faster and more cost-effective recovery and continuous business activity than classic credit. It is suitable for all types of entrepreneurs from all branches of activity, and this is reflected in the increasing popularity of factoring as an alternative financing method, which in Croatia it has not yet reached its full potential. Since only few managed to adapt to a relatively new legal framework that set strict organizational and capital requirements, factoring jobs are mostly conducted by banks or their subsidiaries, so in Croatia under direct and indirect supervision of the Croatian agency for supervision of financial services currently operates only eight factoring companies registered in its register, which is considerably less than in the previous years. New legal framework for factoring companies means restrictive treatment, while for the clients it represents an increase in legal security including a reduction of the risk of fraud on the domestic market, which will ultimately have a positive effect on the transactions of domestic factoring companies because clients will not have the need for an alternative model of financing in abroad.