The Development Bank of the Philippines (DBP) is hoping to speed up lending to small- and medium-sized enterprises (SMEs) by creating an electronic marketplace for their receivables from large companies.
Banks and financial institutions are in the business of buying receivables, also known as factoring. For instance, an SME that supplies goods to a food and beverage firm can sell its 90-day receivables from that same food and beverage company. However, the processing would usually take a month to do so, as the buyer would still have to call up the food and beverage firm to authenticate the receivables.
When banks bid for the receivables of selected companies, SMEs would benefit by getting the most out of their assets.
"The DBP will put up an electronic authentication system for these receivables and then create a marketplace, a bidding system so that banks can compete to lower the cost for SMEs," said Simon Paterno, former DBP president.
