Commercial Factors reaches Rs. 3 b portfolio milestone

Exceptional performance by the entire value chain at Commercial Factors, the factoring & working capital business arm of Commercial Leasing Company Ltd (CLC), helped the company boost its business performance, branch growth and value of its portfolio.

“It has been a fantastic year for us and achieving a Rs. 3 Billion portfolio has marked a golden milestone in the history of Commercial Factors. We are extremely excited about this achievement. This was a result of commitment and dedication of our team” says Muthiah Harieharann, Head of Factoring, Commercial Leasing Company Limited (CLC).

Commercial Factors showed impressive growth of 107% in the total portfolio from Rs.1,457 Bn to charge past Rs. 3 Bn and income rising 78% over previous year.  Mainly generated through new factoring facilities granted to the SME sector, this increase was led by a corresponding growth in branches which grew by to 40 during the same period.

This provincial expansion adds a large share of the growing entrepreneurs in the small & medium enterprise sector to the ranks of traditional customers of Commercial Factors, bringing the company greater prospects of lateral growth. Although small and medium scale enterprises grow most rapidly, the sector is crippled by difficulties in accessing funds for growth from traditional sources. Factoring offers them a lifeline, particularly as it is based on cash flow capability rather than collateral.

In recent years, factoring which is a form of working capital financing gained rapid popularity confirming predictions of financial experts. Since factoring improves cash flow and stabilises operations a large number of companies now prefer factoring as an alternative to bank overdrafts. These account for 80% of Commercial Factors’ current clientele. Muthiah Harieharann also added, “Businesses experience tremendous pressure to minimise finance cost. It is imperative that when they need funds to fuel growth, they borrow at the lowest possible rate. In addition to the industry best rates, Commercial Factors provide clients with specialised speedy service. In fact, our success is very much that. Service is our edge over competitors”.

Incredibly, Commercial Factors record of client attrition is very minimal, and predictably, the contribution to the portfolio by existing clients continues to grow, showing robust growth of over 40% year on year.  “The relationship with our clients is of high importance to Commercial Factors and we extend our sincere gratitude to our clients and debtors who have been with us during this journey of success” added Muthiah Harieharann.  The extraordinary performance of Commercial Factors helped further boost an already impressive performance by the company, Commercial Leasing Company Limited. The company currently has 40 branches islandwide and this number is expected to grow rapidly.   “The consistent contribution from the CLC branch network has been immense over the years. The current contribution from the branch network to the total factoring portfolio accounts to 35%. Commercial Factors Pettah branch which is the first dedicated Factoring branch opened by any financial institution in Sri Lanka has shown very encouraging business volumes” Harieharan said. This year’s achievements will be a benchmark for future growth of the company. As an integral part of its future plans, the company expects further expansion of the branch network during the next financial year. The company believes that a wider branch network would create further awareness of factoring and intends to be a financial partner facilitating development of business Island wide.   The galvanising results clearly show high potential and increasing demand for factoring, prompting Commercial Factors to project even higher revenue and sustained growth expectations over the medium term.