Call to develop factoring of trade receivable leasing

BY HIRAN H. Senewiratne

THE factoring of trade receivable leasing has to be improved for the development of country's Small and Medium Sector Enterprises sector (SME), the Chief Executive Officer of Sampath Leasing and Factoring Limited (SLFL) Nanda Hulangamuwa said.

He said that the SME sector is a well recognised economic catalyst, driving GDP growth and fostering economic well being.

"Therefore it is the need of the hour to support to create new employment avenues, develop rural industry, alleviate poverty and breed entrepreneurs and culminate imbalance in regional development in the country," Hulangamuwa told at the official launch of the SLFL.

He said most of banks and leasing companies concentrate on the financial leasing especially on motor vehicles, which are purely on financial transactions. Those institutes are reluctant to provide loan and leasing facilities for entrepreneurs without tangible security.

"One of the reasons that country's financial leasing is growing owing to its rewards and benefits with lessee," he said.

Under our system it would help small medium and even large scale entrepreneurs' use their working capitals as security to lease their receivables with the SLFL, Hulangamuwa said.

SLFL which provides easily accessible capital through simple documentation and disbursement procedures has also invested Rs 15 million to setup a software and hardware package to monitor all receivable sales ledgers and invoices of all of their clients. This will certainly assist us to combat fraud to a greater extent," he said.

The company is now in the process of introducing new value added products to the market including short period lease, operating lease and early cancellation lease without penalty for lessor.

SLFL, a fully subsidiary of Sampath Bank will focus on bringing to the local market qualitative enhanced lease plans of more developed markets. For instance the principal lease plan currently available is the finance, lease where the lessor merely plays role of a financier.

SLFL will focus on value added lease plans where the lessor will also assume number of asset based risk otherwise borne by the lessees in such lease plans the lessor would for instance take over the burdens of asset maintenance and repair and assume risks associated with obsolescence and residual values, he said.

Other value added lease plans could incorporate operating leases, hiring, transfer options and short or medium term cancellable leases. SLFI has setup their first and second branches in Kandy and Matara and it is expected to setup two more branches in the country before end of this year.