By ANNELIA NIXON

Tribune Business Reporter

anixon@tribunemedia.net

THE Bahamas Chamber of Commerce and Employers Confederation (BCCEC) is backing an accounts factoring proposal, while hailing chamber member Simplified Lending “is a local first mover in the industry”.

BCCEC president Dr Leo Rolle said factoring was discussed at the Afrexim Conference last year June where they covered how The Bahamas may benefit from the scheme. He said BCCEC and Simplified Lending were present to explore factoring. Simplified Lending markets itself as an avenue to to turn a businesses’ outstanding invoices into cash.

“We note the story alluding to a possible injection from IDB into the Sygnus Group for a factoring initiative and believe that the benefits of such an endeavor would have far reaching benefits to the MSME landscape in The Bahamas,” BCCEC president Dr Leo Rolle said.

“We note, though, that a Chamber member, Simplified Lending, is a local first mover in the industry and recently launched its factoring concept that will positively impact the cash flow and profitability of businesses. In fact, the BCCEC shared the centre stage with SL on a panel to discuss factoring last year at the Afrexim Conference in June. It was there that we explored real-world insights from countries already facilitating the service while elaborating on the benefits and drawbacks for our region. This, we believe, spurred the initial appetite for a robus factoring concept locally.

“Factoring allows the entity to purchase the receivables of a business, thereby providing access to liquid cash for other business needs while the owner awaits settlement of the receivable.”

Dr Rolle pointed to profitability and trustworthiness as obstacles, factoring can face.

“Though a blessing, factoring, especially in The Bahamas, is not without its challenges and risks,” Dr Rolle added. “Profitability and trustworthiness of the business are paramount to accessing the inherent possibility for loss. Additionally, thorough vetting of the invoice, its terms and conditions, the vendor, and perhaps a forensic audit to determine the frequency of familiar transactions with the vendor should constitute part of the application requirements. Further, factoring, depending on the entity, may prove costly in the long term as there is undoubtedly a fee associated with the same, whether on the frontend or backend, including but not limited to invoice discounting. Additionally, the factoree must pay attention to restrictive covenants like factoring with recourse or without recourse, which would impact the repayment terms of the facility. 

“We believe that healthy competition is important to any industry and welcome the opportunity of a second mover to this initiative, which should lower the cost and fees associated with the same, since it eliminates the monopolistic stronghold.

“Notwithstanding this, we congratulate our member, Simplified Lending, on taking this bold step and welcome Sygnus, if in fact they are approved for the IDB-funded project. We encourage businesses to educate themselves about factoring by asking questions, looking at international examples, and reaching out to the Chamber that remains willing and able to assist where required.”