LOLC Al-Falaah pioneers Sri Lanka’s first wakalah-based factoring solution

LOLC Al-Falaah, Sri Lanka’s leading provider of alternate financial solutions 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. 

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. LOLC Al-Falaah Head of Alternate Financial Services Shiraz Refai emphasised the significance of this initiative: “As Sri Lanka embarks on a path of economic resurgence, businesses require the right financial instruments to capitalise 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. The launch of LOLC Al-Falaah’s “Wakalah Future-Cash Today” product presents a strategic solution that enhances liquidity and working capital efficiencies while adhering to Islamic financial principles. This innovation reaffirms our leadership in shaping Sri Lanka’s alternate financial services landscape and empowering the SME sector. Designed to deliver multi-sectoral impact, this facility caters to businesses across trading, manufacturing, agriculture, imports, and the services sector. Beyond its Shariah-compliant foundation, it introduces a new paradigm of cost efficiency, flexibility, and resilience.”

LOLC Finance Head of Factoring Deepamalie Abhayawardane 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. Partnering with us provides businesses with a transparent and structured receivable management solution, backed by the strength and trust of LOLC Al-Falaah, an integral unit of Sri Lanka’s largest NBFI, LOLC Finance.”

Reaffirming LOLC Al-Falaah’s ongoing commitment to driving financial inclusion and business empowerment, Refai added, “Our proactive customer engagement strategy has been instrumental in establishing Al-Falaah as a trusted financial partner in both household and corporate sectors. Through financial education, seamless access to capital, and an integrated suite of alternate financial solutions, we continue to reinforce our position as Sri Lanka’s undisputed leader in Islamic finance.”

Highlighting the broader industry impact, Abhayawardane stated, “LOLC Finance’s Factoring Business Unit has been a leader in supporting Sri Lanka’s business sector with tailored working capital solutions for over three decades. Our expertise in factoring operations has positioned us as the country’s most reputable working capital and receivable management service provider. The introduction of Islamic factoring through LOLC Al-Falaah marks a significant milestone in Sri Lanka’s financial landscape. By providing an alternative working capital solution, particularly for SMEs, this facility bridges a critical gap in the market empowering businesses to scale while remaining true to their values. More than just a financing tool, LOLC Al-Falaah’s alternate Factoring solution serves as a catalyst for business expansion while strengthening Sri Lanka’s Islamic finance ecosystem.”