Micro lender Sprint offers financing backed by invoiced goods
MICROFINANCING COMPANY Sprint Financial Services Limited has brokered a new partnership with the Jamaica Manufacturers and Exporters Association,
JMEA, to offer ‘invoice factoring’ to its membership. Factoring is a financial transaction in which a business sells its accounts receivable – invoices – to a third party, called a factor, at a discount. “While it is difficult to put a dollar figure on the agreement, which we know is substantial, I can surely say it is likely to be in the high six-figure range,” Sprint Financial CEO Sprint CEO Christopher Barrett said Monday.
Sprint Financial, which is going up against the likes of EXIM Bank and JMMB, which make loans against receivables, aims to capture 5-10 per cent of the market in year one, Barrett said, while indicating that the market was largely untapped.
He said right now the market for factoring was “rather small considering the need for such a service.”
Under the arrangement with the JMEA, Sprint will provide an advance of a majority percentage of the invoice value within 24-48 hours of the financing deal being struck. Sprint will assume responsibility for collecting payment on the invoices.
“This allows the business to immediately build up its cash flow, making it easier for them to take care of immediate expenses,” the parties said in a statement.
Barrett said “upwards of 30 per cent of JMEA membership” had expressed interest in the factoring service and “so far clients from that membership base represent about 10 per cent of our business”.
Sprint’s current client base, he said, included retailers, food distributors, clothing manufacturers and farmers.
The seven-year-old microfinancing company also announced on Monday that it will soon be offering clients expecting payments internationally, the same factoring service via American company PayPal Holdings.
PayPal is a worldwide onlinepayments system that supports online money transfers.
Barrett says Sprint caters to both registered and unregistered businesses, restricted only by the maximum value of an invoice.
Its service charge, on average, ranges from 8 per cent to 12 per cent interest on the amount of the invoice; while the repayment period for the factoring loans is 30-45 days, he said.