INVESTMENT-savvy companies are looking at using their receivables to raise funds.

While some businesses are already using future collections on their sales to secure cash now, albeit on a small scale, there is “tremendous potential for it”, according to Herbert Hall.

“Some of the conversations we have had with prospective issuers include assisting the company to raise funds using the receivable that they have,” said the NCB Capital Markets manager of corporate solutions.

Businesses can either seek to sell their receivables outright based on some factoring, or discount, for cash flow, or borrow against the receivable as collateral.

Hall suggested that extending the concept to selling withholding tax receivables would also open up channels for financing.

The Government withhold taxes on interest income, at 25 per cent, but reimburses the funds to entities that are exempt from the tax, such as pension funds.

Allowing them to sell those receivables would allow them to free up investment funds.

“Government could look at that and we have an interest in it as well,” he said.

Companies have become less shy to use the capital markets to achieve their goals, by Dylan Coke’s reckoning.

Moreover, investors are showing a greater understanding of high finance and have become a lot more willing to be creative in seeking funding for their ventures, according to the assistant vice-president of NCB Capital Markets.

This year saw a number of companies raise billions of dollars through investment banks, but Coke is expecting an even busier 2013 despite a weak economy next year.

“We see a lot of companies looking to raise money for a variety of things — expansion, acquisitions and so on — and people still looking to refinance existing debt,” he said.

Jamaica Producers’s private placement of $1 billion of debt, which it used as part of its $1.7 billion acquisition of a 25 per cent stake in Kingston Wharves, and Pan Jamaican Investments’s $890m secured notes issue, were good examples of how companies were already using the capital markets, according to Coke.

NCB Capital Markets was a joint arranger and the lead broker for the Producers deal and selling agent for the Pan Jam notes.

“That tells me that people are more knowledgeable about the process,” he said. “You are seeing more different structures than you used to.”

NCB Capital Markets also arranged and brokered US$100 million notes for the Government, which it used to pay off a ¤200-million bond in July, and was lead broker and arranger for private placement GOJ guaranteed notes for National Water Commission, valued at US21 million, and Central Wastewater Treatment Company, (US$37 million).

The University of the West Indies, issued $2.1 billion of secured notes through the investment bank, which also arranged and brokered the refinancing of another $2 billion secured note.