New partnership to reduce bottlenecks in invoice factoring

CEO of Lynch Capital Ghana, Frederick Dodoo (R) seated with Corlido Group CEO, Cornelius Lippe Doevendans (L) during the signing of the agreement

Lynch Capital Ghana and Corlido Group of Netherlands have launched a partnership to resolve the bottlenecks of invoice factoring and receivables financing of first hand frustrations of local suppliers during times of payment delays.

Invoice factoring, is a way out for businesses to fund their cash flow through selling their invoices to a third party (a factor, or factoring company) at a discount which can be provided by independent finance providers or the banks.

The Factor Chain International (FCI), the umbrella organisation for independent factoring around the world currently has over 400 members in 90 countries, excluding Ghana.

Current data shows that factoring is growing much faster than the European economy, confirming the growing popularity of this method of funding.

Africa’s share however in factoring is very low, representing just one percent of global figures.

Morocco and South Africa accounted for Africa’s factoring growth in the face of declining volumes elsewhere, whereas factoring gained momentum in Nigeria in 2017.

The Chief Executive of Lynch Capital, Mr. Frederick Dodoo said the move is aimed at finding a singular solution to bridge the gap of providing local suppliers an option from the traditional working capital means.

‘’As it stands now, you can source from our procurement platform and we will take responsibility of funding the cash flow through invoicing.

‘’With this agreement, we expect to offer the local supplier an option from the traditional working capital means. Not only to support the working capital deficiency concerns but also to make the whole process of invoice factoring and receivables financing convenient,” he added.

Group Chief Executive of Corlido Group, Cornelius Lippe Doevendans welcomed the agreement as a milestone to develop procurement and factoring as a means of offering local suppliers the funding to sustain their business.

‘’Our intention is to make businesses thrive in Ghana because of the big potential procurement and factoring can offer to local suppliers,” he noted.

The Minister for Business Development, Dr Ibrahim Awal Mohammed in his remarks appealed to the Corlido Group to offer competitive interest rates to allow local businesses to thrive.

“We need an interest regime that is below 18 percent, which will allow Ghanaian businesses, especially local suppliers to be globally competitive.”

He also advised the two entities to look beyond their partnership and consider providing support for women in entrepreneurship, adding that less than 40 percent of women have access to formal loans.

‘’Women are the best business minded people we have in this country, and that figure of less than 40 percent with access to formal loans does not auger well for an inclusive growth and government,” he stressed.

Ronald Strikker, Ambassador of the Netherlands to Ghana said the partnership demonstrates the long-standing intention and support between Ghana and the Netherlands in offering local businesses a platform to thrive.

“We are transitioning and stepping away from the traditional means to a development co-operation of growing from ‘Aid to Trade’ which completely is in line with government’s agenda of Ghana Beyond Aid,” he concluded.

By Mawuli Y. Ahorlumegah