The distribution sector is awaiting a new factoring law, which is expected to significantly improve businesses’ access to working capital. According to Lasha Rizhamadze, chairman of the Distributor Business Association, the main innovation is that companies will be able to use factoring without needing approval from retail chains.
“Factoring allows companies to mobilize working capital quickly and efficiently. Currently, retailers often refuse, limiting the use of this option. The new law removes this dependency, so companies will no longer need the retailer’s consent,” Rizhamadze explained.
The Parliament is reviewing the “Factoring Law,” aimed at creating an alternative financing source for small and medium-sized businesses. The reform involves amendments to 15 different laws, regulates factoring companies, and requires registration with the National Bank, a 10,000 GEL fee, and a minimum capital of 300,000 GEL. The government says the reform will reduce the cost of working capital and improve management of receivables, which could ultimately impact product prices.
