The Tribune

By YOURI KEMP

A Bahamian attorney yesterday called for the government to enable monies to better circulate in the economy by passing laws to facilitate businesses wishing to sell their receivables.

Gregory Moss, the former MP, backed such schemes - known as accounts factoring - as a means to generate cash flow for companies who simply lack the wherewithal to chase down and collect monies they are owed.

Arguing that the government needed to go further than its proposed Economic Recovery Zones in the wake of Hurricane Dorian, Mr Moss said it needed to stimulate private sector revival through more creative means - and accounts factoring schemes were one of them.

“We have to look at what former US president Barack Obama did with stimulating automobile companies. He stimulated the businesses,” Mr Moss argued. “In The Bahamas, all of these companies have receivables, but no one has any money to pay these receivables.”

He said this resulted in a sluggish economy when money is not moving around freely, and urged the government to create the enabling factoring framework for addressing this. “We need to enact policies that would allow for factoring that would allow these businesses to sell their invoices,” Mr Moss argued.

Factoring is a financial transaction, and type of debtor finance, where a business sells its accounts receivables (invoices and monies owed to it) to a third party (a factor) at a discount. The factor will then assume the rights to these debts, and responsibility for collecting them, as the selling business “factors” its receivable assets to meet its present and immediate cash needs.

Mr Moss added that there is “no factoring happening in The Bahamas, and no legislation that allows for it. You make the business sector the agents of recovery instead of the government. The sitting back by the government is dereliction of duty”.

Mr Moss argued that the Economic Recovery Zones unveiled by the Prime Minister would “not produce anything” in terms of meaningful restoration and revival, post-Dorian, and the private sector’s much-needed economic recovery. “What we require is a stimulation of the businesses in Grand Bahama,” he added.

And, addressing concerns surrounding the Port Lucaya Marketplace’s opening, Mr Moss said: “The closure of the Port Lucaya Marketplace is, of course, terrible, but when put within the context of the larger slowdown in the economy of Grand Bahama prior to Hurricane Dorian it only magnifies the impact of what Grand Bahamians were already enduring.”