Factoring is an alternative funding instrument where a business sells its invoices to a third party (factor) to meet its short-term liquidity needs. Factoring is an important tool to support companies in managing the required level of liquidity, offering them the advantage of obtaining price discounts from suppliers.
The Investors Council and its Secretariat made a significant contribution to the process leading to this reform. In particular, the Secretariat played a key role in facilitating structured dialogue between public institutions and private‑sector stakeholders.
The law establishes a specific legal framework for factoring in Georgia. Among other things, it regulates the transfer of eligible receivables, provides for a registry-based system, and aims to improve legal certainty in this area. It also lays the groundwork for the more structured development of factoring services in practice.
This is particularly relevant for SMEs. A functional factoring framework may improve access to short-term liquidity, ease pressure caused by delayed payments, and provide businesses with an additional instrument for managing cash flow and financing operations.
The reform was made possible through cooperation between public and private actors, and its practical implementation will now be the key factor in determining its effectiveness for the business sector.
The Law will come into force from 1st January, 2027.
