The amendment to the Commercial Code in 1995 included factoring as one of the basic commercial activities together with lease and franchise. It was because factoring was increasingly used by financial companies for their clients ever since its introduction to Korea in 1980. However, only a few provisions of the Commercial Code and the Non-Bank Banking Act regulate such commercial transactions. This article explains the players and their mechanisms of factoring (II), how factoring is possibly evolved in the future (III), and what legally matters with factoring in Korea (IV). It also examines which provisions of the Commercial Code be revised in due course (V). It should be noted that factoring has been very useful in the United States, where the merchants issue checks for the payment of commercial transactions and don’t know the discount of promissory notes. Factoring without recourse is prevailing in the United States while Korean factors prefer the one with recourse because they have little information about the financial status of customers. In conclusion, factoring is being utilized as a tool of asset-based financing as well as custom-made financial innovation. Therefore, sufficient statutory provisions will be necessary so that small-sized enterprises with plenty of accounts receivable may properly cash in on them. In principle, the factors can secure the priority of their claims assigned through factoring by notification to the customers or customers’acceptance of such assignment. For the purpose of perfection, the electronic filing could be most effective. It might be reasonable to regulate factoring within the scope of secured transactions as in the U.S. UCC Article 9. The Judiciary Branch has disclosed a legislative proposal on the special treatment of electronic filing for the assignment of accounts receivable which amounts to perfection of security interests. The Ministry of Justice (MOJ) is also working on a task to formulate a new collateral system under which moveable properties, accounts receivable, intellectual property rights, etc. held by small businesses can be provided as collateral for financing at improved terms. The MOJ proposal is expected to suggest the same electronic registration as the Judiciary proposal. What kind of legal effects will be granted to the electronic registration remains to be seen since the MOJ legislative committee has not yet completed its task. As far as electronic filing is employed for the perfection, the e-registry will be accessible by the interested parties via the Internet. In this connection, the factors will be safeguarded from the risk of contingent encumbrance levied by unknown creditors.