Description

Additional finance instruments yet to be broadly applied to inclusive business, include factoring of accounts receivables, leasing for equipment and vehicles, and equity financing. Leasing, for example, is an increasingly important complementary source of investment finance, particularly in countries where the information infrastructure is weak. A potential advantage of leasing lies in the fact that it focuses on the ability to generate cash flows from operations to make the leasing payments, rather than on credit history or ability to pledge collateral. Factoring, a complementing instrument, has the advantage that its underwriting is based on the buyer’s risk, rather than the risk of the seller.

Policy Instruments: