Business

NCB to expand its receivables financing programme

Micro, small and medium-sized enterprises (MSME) to be brought in

BY DURRANT PATE
Observer Business Writer

Wednesday, August 21, 2019

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National Commercial Bank (NCB) is now in talks with the Development Bank of Jamaica (DBJ) regarding the sourcing of on-lending funds to expand its receivables financing programme.

Informed sources say NCB is seeking to draw down on development funds from the DBJ, which would be offered to micro, small and medium enterprises (MSME). While the talks are preliminary, our sources say NCB would act as a window for DBJ development funds for receivable financing for the MSME sector.

When pressed for more details, our sources were reluctant to provide any further information, pointing out that the negotiations are at the early stage.

Receivables financing allows for the bank's clients to improve their cash flow by converting their accounts receivables, invoices into cash, instead of waiting for their buyers to pay on maturity day, which usually runs for 30 days. Thus their receivables are converted to cash, generally at a discounted rate.

When contacted, Wayne Blake, relationship manager in the Corporate, Commercial and Consumer Banking Division of NCB, declined to comment on the negotiations with DBJ and would only speak on the bank's current receivables programme.

He explained that NCB's receivables financing programme is only offered to large companies, however, there are plans to expand the programme to the MSME sector.

Blake told The Jamaica Observer that at present the average receivables financing take-up is just under US$1 million, but was quick to point out that the bank won't be overexposing itself, so the receivables in which the bank would be providing financing would be limited.

Explaining how the programme works, Blake said “customers would be able to turn their receivables, their invoices into cash. We would provide them with financing against their receivables to come, and we collect from their customers”.

When asked about the type of companies to which NCB has offered this programme, Blake emphasised, “it's limited to large corporate companies because with receivables financing, we are depending on the strength of our customer — so ultimately our payout is going to come from our customers' customer. You want to have a situation where you are relying on fairly good credit so [that] the likelihood of repayment is great.”

New NCB Corporate, Commercial and Consumer Banking Division

The NCB relationship manager disclosed that his division is a fairly new one, which arose out of recently restructured units and divisions within NCB.

“The unit is an amalgamation of what previously existed as the corporate banking unit that targeted large corporate customers, the middle market unit which catered to mid-sized companies, and the consumer segment that dealt with retail customers,” Blake said.

He concluded that the units were merged in one Corporate, Commercial and Consumer Banking Division to improve service delivery.

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