Instead of waiting for the ever-delayed payments from millers and exporters, rice farmers north of the Amazon River may have a new option of financing their businesses. The answer to their problems: FactorPlus. This Curacao-based financing company is looking for possible ways to expand its business operations and services to several parts of Caribbean, including Guyana and Suriname, which are two sovereign states lying north of Brazil.
While speaking during the Caribbean Pacific Agri-food Conference in Barbados, Paul Dijkhoffz, business development manager of FactorPlus, explained how their company has had several years of experience in trade financing and is currently succeeding in providing services to farmers in parts of the Caribbean. This is due to the numerous challenges faced by the majority of farmers when accessing traditional financing.
FactorPlus works in three simple steps. First, farmers/producers sell and deliver their farm produce to buyers at hotels, supermarkets, food stores, etc. Second, after the sale/delivery, FactorPlus comes in by purchasing the invoices -paying the sellers (farmers and producers) 80 percent upfront of the total unpaid amount within 48 hours. Third and final step, FactorPlus pays the remaining 20 percent after it has collected the money from the buyers and subtracts its factoring fee.
This simple and straightforward mechanism saves the farmers/producers the inconvenience of asking the buyers for their money. FactorPlus intercedes on behalf of the former, and the financing firm takes all the risks.
Currently, FactorPlus offers its financing services to farmers in Curacao, Aruba, Miami, Bonaire and St. Maarten. It is planning to expand its services to the entire farming sector in the area.
FactorPlus also offers loans to farmers at very low-interest rates ranging between 4 and 7 percent. This is in great contrast to the high-interest rates offered by traditional financiers, which mostly range from 30 to 40 percent.