LOLC Al-Falaah pioneers Sri Lanka’s first Wakalah-based factoring solution
View(s):LOLC Al-Falaah, Sri Lanka’s leading provider of alternate financial solutions, has announced the launch of ‘Al-Falaah Wakalah Future-Cash’, a pioneering Shariah-compliant alternative for Factoring, Invoice and Cheques discounting facility, designed to transform business financing.
This ground-breaking financial solution empowers businesses to elevate and realise future cash flows in real-time, while maintaining adherence to ethical financial principles. Setting a new benchmark in Sri Lanka’s Islamic financial services sector, this initiative strengthens LOLC Al-Falaah’s commitment to innovation and excellence in the alternate finance arena, the company said in a media release.
Unlike conventional Factoring, which relies on interest-based returns against receivables, LOLC Al-Falaah’s ‘Wakalah Future-Cash Today’ product is structured under the ‘Wakalah-Bil-Istithmar’ concept, ensuring full compliance with Islamic economic jurisprudence. Through this model, LOLC Al-Falaah provides capital infusion into business operations in exchange for a pre-determined Anticipated Profit Return (APR), eliminating interest-based transactions. Businesses are appointed as agents to deploy these funds within their operations, with surplus earnings allocated as a performance incentive. This structure enhances financial discipline, promotes transparency, and encourages ethical business practices.
The introduction of this pioneering facility is particularly timely as Sri Lanka transitions towards economic recovery and long-term stability. Shiraz Refai, Head of Alternate Financial Services at LOLC Al-Falaah, emphasised the significance of this initiative: “As Sri Lanka embarks on a path of economic resurgence, businesses require the right financial instruments to capitalize on emerging opportunities. As a trailblazer in the alternate financial services sector, LOLC Al-Falaah has identified a critical gap in the bills-discounting and factoring industry.”
Deepamalie Abhayawardane, Head of Factoring at LOLC Finance, further elaborated on the facility’s unique value proposition, “For businesses seeking Islamic factoring solutions, LOLC Al-Falaah’s ‘Wakalah Future-Cash Today’ product offers an efficient, participatory financing model that aligns with both financial requirements and ethical considerations. We recognise the diverse challenges businesses face, and our tailored solutions are designed to improve cash flow, mitigate credit risk, and drive sustainable growth.”
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