THE pioneers of factoring in Sri Lanka – Lanka ORIX Leasing Company Ltd. (LOLC)’s Working Capital Business Unit (WCBU), demonstrated a striking portfolio growth of 53% over the first six months of the 2010/2011 financial year, which is indicative of the current trend in interest rates creating an impressive demand for credit.
The WCBU of LOLC, reflected on its journey that commenced back in 1992 by becoming Sri Lanka’s first factoring company registered under the name of Lanka ORIX Factors Ltd (LOFAC). The then LOFAC was committed to providing factoring solutions to a growing market of customers interested in Factoring and Invoice Discounting services. Over the years, LOFAC diversified to offer total working capital solutions and expanded to offer innovative and personalized products and services specializing in Structured Working Capital Loans, Purchase Order Financing and Cheque Discounting.
LOFAC was later rebranded as the Working Capital Business Unit of LOLC when it merged with the LOLC Group in 2009.
In simple terms, WCBU’s involvement in working capital is to assist enterprises to run their day to day businesses through advances against future receivables. Once a credit sale takes place, the client discounts his receivables with the factoring company and receives immediate cash. The factoring company will then follow-up with the debtor(s) and collect the dues on the applicable future date. If the client wishes confidentiality about his dealings, he may collect post dated cheques from his debtors and forward them to the WCBU in settlement of his borrowings, generally considered as Invoice Discounting.
Apart from Factoring and Invoice Discounting, the WCBU also provides structured loans to existing and new customers for business improvement, capital investment or import/purchase of raw materials. Similarly, Purchase Order Financing for existing factoring clients can be arranged to meet requirements of bulk purchases and seasonal orders.
One of the more popular and fast growing products offered by the WCBU is Cheque Discounting. Here the client’s borrowing is settled either via the deposit of post dated cheques collected/collectible from his individual debtors or from a cheque(s) drawn by the borrower totaling the full amount due, in lieu of the large number of debtor cheques.
Hence, when a cash block occurs or a seasonal requirement crops up, clients are no longer solely reliant on a conventional bank loan or overdraft, for which acceptable collateral and documentation is required. They can obtain tailor made working capital solutions from LOLC, including collection services.
The most distinguishing feature of the WCBU is that the financial solutions offered by them are not industry specific; but are dynamic and diverse to accommodate and cater to working capital requirements of any industry. Hence, obviating from the perception of being solely a factoring solutions provider, LOLC’s Working Capital portfolio has now evolved and gained momentum as a valuable financial entity comprising of alternative financial solutions that are adaptable to any industry’s requirements.
Moreover, what makes WCBU a preferred total working capital solutions provider is its variety of product segments that are readily available to anyone. Clients also have the opportunity to engage in multiple customer segments, allowing market expansion which would assist their businesses to develop whilst maximizing its profits.
On the other hand, with the LOLC Group’s branch network rapidly increasing island-wide, it is expected that the WCBU too will accelerate its services to cater to a dynamic business populous found across the country. With the much anticipated boom in the tourism sector and the overall economy consequently, WCBU sees many prospects it can exploit in the future.
Much of WCBU’s success is attributed to the strength of its resilience through time. The combination of strength of staff and the strategic alliances made over the years contributed immensely to the Company sailing steadily through its most turbulent times. Operating as an independent entity within the LOLC Group’s purview, WCBU’s journey has been both impressive and inspiring.
Commenting on this significant achievement, CEO of LOLC’s Working Capital Business Unit, Mr. Graham Lawrence said, “WCBU’s services are highly sought after because of its appeal as an alternative financial solution which is both dependable and efficient, and which ensures maximum profitability. Especially, when considering the availability of limited options one comes across when engaging in credit sales transactions, the ability to understand customers’ unique requirements and adapt to it through our array of products and services, is a unique feature that the WCBU is proud of. This reputation that we have built over the years was due to our long term presence in the country’s financial sector. Being the pioneers, we had to build the factoring concept from scratch. From acquiring the technical know-how to software development, improving on our initial alliances with DBS Bank in Singapore and then with the Factors Chain International, we have traveled a long, arduous and successful journey. None of our achievements would have been possible if not for the strength and commitment of the team at our WCBU, many of whom have been with us since the very inception. Over the years, they have developed an acute knowledge of all our business segments which has largely contributed to the success of our unit. In short, our success is our people.