DIRECTOR of the Local Content Secretariat, Michael Munroe, has commended the Guyana Bank for Trade and Industry (GBTI) for demonstrating flexibility as it now allows local companies to use invoices from oil and gas companies to access loans.

Access to financing has long been a major challenge for local suppliers trying to break into the petroleum sector. However, Munroe noted that GBTI has taken the initiative to allow local suppliers to submit their invoices to obtain financing.

During a recent interview on the Starting Point Podcast -The Oil and Gas Edition, the director explained that local suppliers, after providing a service to an oil company, prepare and submit an invoice, but are then required to wait between 30 to 45 days to receive payment.

Munroe pointed out, “That window still requires a company to operate. So, you still need working capital to continue your operations. So that, in and of itself, would have acted as an artificial impediment to allowing Guyanese companies to participate, that’s the first point, and two, to allowing them to grow.”

It should be noted that the government has already reduced the payment timeline from 90 days to 45 days and is still exploring ways to shorten it further.

“Another great initiative is, we have the local bank; I think GBTI would have introduced an invoicing financing mechanism, where, if you get an invoice from a particular company or a contract, you could use that invoice as a means of collateralising your business,” Munroe said.

He explained that this initiative eliminates the traditional approach to loans, which usually comes with several stringent requirements. With the progression of the petroleum industry, the director underscored the need to diversify and modernise how businesses are financed.

“I think we must commend GBTI… At the same time, this requires Guyanese businesses and Guyanese persons to use the banking industry, because a bank would be more amenable to doing this with a customer that has a history with them, that has a relationship with the bank,” he stressed.

As he urged local suppliers to build and maintain relationships with the local banking sector, the director encouraged other financial institutions to follow in the footsteps of GBTI, thereby strengthening Guyana’s leadership on local content.