“Retail chains have been systematically worsening payment terms for distributors over the past three years, effectively using suppliers’ money to finance their own expansion,” that was the conclusion drawn at a session of the Georgian Parliament’s temporary commission examining the pricing structure of food products, medicines, and fuel.

Commission Chairman Shota Berekashvili made this observation during a meeting with Dimitri Meskhishvili, a representative of Distribution BDC Company, presenting findings from the company’s own audit reports.

“Across the distribution sector, almost everywhere I look, I see a deterioration in payment terms over the past three years. Based on your own audit reports, I observed that payment periods initially started at 60 days, then increased to 75 days, and later to 90 days. This means that the retail networks are using your money for other purposes,” Berekashvili told Meskhishvili directly.

The commission chairman went on to explain the financial mechanics at work. When a retail chain with a monthly turnover of 100 million lari extends its payment deadline by a single day, it frees up three million lari in working capital. Extend it by ten days, and that figure rises to 30 million.

“Worsening payment terms means the emergence of new, free capital for the networks; capital which they are in all likelihood using to expand, open new stores, and so on. The time will come when we discuss that too,” Berekashvili said.

Asked directly whether he could confirm that payment conditions had worsened over the past three years, BDC Company’s representative Meskhishvili did not hesitate: “Absolutely. I agree with you entirely, payment terms have been getting worse year on year.”