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Interviews, Professional Services & Technology

Factoring in Panama: interview with Kathia Rivera and Celideth Gudiño on setting up a factoring company

Avatar photoDeilys Romero210 Mins Read
Factoring in Panama: interview with Kathia Rivera and Celideth Gudiño on setting up a factoring company

In short: Panama has no specific factoring law, but it does have the pieces that make it viable: the assignment of receivables as the “backbone” of the transaction, the electronic invoicing law that recognises the invoice as a negotiable instrument, and a Superintendency that supervises, rather than regulates, the sector’s companies on money laundering. That is how Kathia Rivera, president and founder of Legal Solutions Panamá, and Celideth Gudiño, financial services partner, explain it in a conversation recorded at the firm’s offices in Panama City. Setting up a factoring company takes about seven days for the corporation, a month for certification by the Ministry of Commerce and Industry and another month for registration with the Superintendency, with no need to travel. The underserved niches, according to both, are SMEs with invoices of 5,000 to 25,000 dollars, agriculture and transport.
Contents of this interview
  1. Who is speaking
  2. “Panama is the great unknown of the region”
  3. No factoring law, but not without rules
  4. The niches nobody serves
  5. How a factoring company is set up, step by step
  6. Where Panama is heading: association, law and registry
  7. The full interview on video
  8. Frequently asked questions
  9. Sources

Who is speaking

Kathia Rivera Morales is a lawyer trained at the University of Panama, with postgraduate studies at the University of Salamanca, and founder and president of Legal Solutions Panamá, a boutique corporate, tax and immigration law firm serving clients from more than 55 nationalities. Celideth Gudiño is her partner for financial services and runs Factoring y Finanzas, a company dedicated to invoice financing. The conversation, published on the firm’s YouTube channel, takes up the questions its followers ask about how to set up a factoring company in Panama. Radar Panamá transcribes and organises it; the quoted phrases are translated from the Spanish recording, with minimal adjustments to punctuation.

Kathia Rivera

President and founder of Legal Solutions Panamá. Corporate, tax and immigration law for international clients.

Celideth Gudiño

Financial services partner and director of Factoring y Finanzas. Specialist in invoice discounting and confirming.

Format

Eleven-minute conversation recorded at the firm’s offices in Panama City, published on YouTube.

Topic

Advantages, legal framework, niches and procedure for setting up a factoring company in Panama.

“Panama is the great unknown of the region”

Rivera opens the conversation with a diagnosis she repeats twice: compared with Chile, Peru or Colombia, countries with established factoring regulation, Panama remains a little-known market for this business. Gudiño attributes it to the absence of a specific law, which creates mistrust among those looking in from outside, but argues that this same lack of tight regulation is what leaves room for new operators.

“Panama is the great unknown of the region. We have big countries, like Chile, Peru, Colombia, which obviously are well ahead of us in terms of regulation. But Panama has many advantages for developing a financial services company.”
Kathia Rivera, president of Legal Solutions Panamá
“Since we have no specific regulation, we have no factoring law, many people are a little afraid when they want to do transactions in Panama. But there are many market niches in factoring waiting to be discovered, and many SMEs that need the service and are currently underserved.”
Celideth Gudiño, financial services partner

No factoring law, but not without rules

The question that worries an investor most is whether operating without a specific law is the same as operating without protection. Gudiño says no: the assignment of receivables, a figure of Panamanian civil law, is the legal basis of every factoring transaction, and the electronic invoicing law recognises the electronically issued invoice as a negotiable instrument, which strengthens any claim.

“Through assignments of receivables there is a mechanism that becomes the backbone of factoring. So we are not entirely unregulated or unprotected either, because we also have the electronic invoicing law, which recognises the electronically issued invoice as a negotiable instrument.”
Celideth Gudiño
Piece of the legal framework What it provides Who is involved
Assignment of receivables Legal basis for buying invoices; the “backbone” of factoring Civil Code and contracts between the parties
Electronic invoicing law Recognises the electronic invoice as a negotiable instrument and strengthens claims Directorate General of Revenue
Financial company certification Authorises the company to operate; “they don’t even call it a licence” Directorate of Financial Companies of the Ministry of Commerce and Industry
Anti-money-laundering supervision Manuals, forms, projections and declared niche; transaction reporting codes Superintendency of Non-Financial Subjects
Key fact: according to Gudiño, about five years ago the Superintendency began supervising factoring companies. The distinction she stresses is that the sector “is not regulated but supervised”, above all on money laundering and terrorist financing. That explains why the procedure requires manuals and projections, not a banking licence.

The niches nobody serves

The most useful part of the conversation for anyone evaluating the business is the map of niches. Gudiño describes four variants operating in Panama and points out where supply is lacking.

  • Pure factoring: discounting invoices already issued, the classic product.
  • Pre-factoring: financing against purchase orders and contracts, that is, future receivables. “It is usually more in the government sector: construction works, repairing roads, building new hospitals. Government factoring moves a lot there.”
  • Confirming: “it has only been in Panama for a few years, it came in last with more force”; some banks offered it timidly and now it is in their portfolio.
  • Underserved niches: “the agriculture niche, the transport niche, where if a company specialises and arrives with a clear vision that it can provide that service, it has a lot of opportunity”.
“Invoices of 5,000 to 25,000 dollars find no financing, because for a bank the operating cost of a 5,000 invoice is the same as that of a 100,000 one. So they are not interested, because the return is different.”
Celideth Gudiño

That range of small invoices is, in practice, the market of Panamanian SMEs, and it coincides with the demand the country’s growth is generating in services, as shown by the tourism and business figures analysed by Radar Panamá.

How a factoring company is set up, step by step

Rivera sums up the process as a “turnkey” project on two fronts: the legal one, handled by her firm, and the supervisory one, managed by Gudiño. The timeframes they cite are the ones they were observing at the time of recording.

  1. Incorporate an operating company in Panama. “It has to be an operating company in Panama; this company is ready in seven days”, Rivera explains. The general process is detailed in Radar Panamá’s guide to opening a company in Panama.
  2. Apply for certification from the Ministry of Commerce and Industry. “We go to the Directorate of Financial Companies to apply for the certification; they don’t even call it a licence. The certification is taking a month.”
  3. Gather the documentation. Certification of the company’s capital, articles of incorporation, Public Registry certificate, board minutes declaring it will become a factoring company, and copies of the passports of directors and shareholders. “They don’t need to come to Panama or be in Panama.”
  4. Submit manuals and projections to the Superintendency. “What it requires is that the different manuals, the different forms be submitted, plus projections and the market niche where the company is going to be”, Gudiño describes. “It can take about a month if everything is submitted correctly.”
  5. Receive the reporting codes. “The Superintendency assigns us the codes for the factoring company’s communication with the Superintendency, where we are going to enter all the information on the clients we take on and the transactions carried out.”
  6. Start operating. With the certification, the registration and the codes, the company can buy invoices. “It is a very easy, very simple process. All you need is the desire to come to Panama and get started.”

Where Panama is heading: association, law and registry

Both agree the sector is moving towards its own regulation. Gudiño mentions taking part in an international factoring convention and lists three pending steps: a trade association, a factoring law and, above all, giving the invoice enforceable status.

“I think the step is to create a factoring association, the factoring law and, most importantly, that the invoice carries enforceable status, which is what the market is crying out that we need.”
Celideth Gudiño
“The first step has already been taken with the electronic invoicing law, which recognises the negotiable instrument. But it is also true that we are on the road towards the registry, the famous registry that Chile has, that Colombia has, that Peru has. Panama looks good in terms of the legislation we are going to develop in the coming years.”
Kathia Rivera

The regulatory context has since moved in the direction they anticipated: Panama left the FATF grey list in 2023 and has strengthened the supervision of non-financial subjects and the beneficial ownership registry, as covered in Radar Panamá’s guide to Panamanian companies and their obligations.

The full interview on video

Interested in setting up a factoring or financial services company in Panama?
Legal Solutions Panamá, a law firm based in Panama City led by Kathia Rivera, with more than ten years of experience and clients from more than 55 nationalities, handles the incorporation of the company and the certification before the Ministry of Commerce and Industry.

See how to set up a company in Panama with Legal Solutions Panamá

Frequently asked questions about factoring in Panama

Does Panama have a factoring law?

There is no specific law. The transaction rests on the assignment of receivables under civil law and on the electronic invoicing law, which recognises the electronic invoice as a negotiable instrument, as Celideth Gudiño explains.

Who supervises factoring companies in Panama?

The Superintendency of Non-Financial Subjects, on the prevention of money laundering and terrorist financing. The sector “is not regulated but supervised”, in Gudiño’s words.

How long does it take to set up a factoring company in Panama?

According to Kathia Rivera, about seven days for the company, around a month for the certification by the Ministry of Commerce and Industry and roughly another month for registration with the Superintendency, if the documentation is complete.

Do you have to travel to Panama to open a factoring company?

No. Rivera says the process does not require coming to or being in Panama; it is handled with the passports of directors and shareholders, the articles of incorporation, the Public Registry certificate, board minutes and the capital certification.

What types of factoring are practised in Panama?

Pure factoring (invoice discounting), pre-factoring (financing of purchase orders and contracts, common in public works), confirming (a recent arrival) and international factoring.

Where are the business opportunities?

In invoices of 5,000 to 25,000 dollars that banks do not finance because of operating cost, and in underserved sectors such as agriculture and transport, according to Gudiño.

Which documents does the Superintendency require?

Prevention manuals, forms, financial projections and the definition of the market niche the company will operate in. After approving them, it assigns the transaction reporting codes.

What regulatory changes are expected?

The interviewees anticipate a trade association, a factoring law, an invoice registry like those of Chile, Colombia and Peru, and enforceable status for invoices.

Sources

Radar answers

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By Deilys Romero

Deilys Romero is a writer at Radar Panamá. A business administrator with a specialisation in accounting, Venezuelan, 48, she covers the economy, companies, taxes and SME management with a practical approach. Based between Panama and Colombia, she closely follows the business activity of both countries.

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