Access to finance is an issue for small, medium, and micro enterprises (SMMEs) across various sectors, but those involved in imports, freight forwarding and logistics have effectively been excluded from the finance market, says fintech executive Eli Michal.
Motivated by the cash flow issues this causes, the startup now finances SMMEs with annual revenues between R500 000 and R30 million, giving them working capital to grow their businesses and creating a new market for those in logistics.
According to the CEO of Payabill, they take the risk of settling international suppliers directly for qualifying SMMEs, who apply using a simple and quick digital process.
“Small businesses carry a high credit risk, and it is costly to assess their eligibility for finance, so they have been neglected by traditional lenders,” Michal explains.
“Plus, banks and other specialised firms usually have onerous credit requirements which few small businesses can meet.
“International finance is a complicated niche that requires knowledge of regulation, compliance and forex. Our offering is 100% digital, fast and compliant. Clients choose how often they wish to make payments and over what period so that they don’t take on any additional strain and can grow their businesses.”
The offering, developed in partnership with Sasfin Forex, allows a business to settle an international supplier and to negotiate suitable terms of up to 90 days, even accepting pro forma invoices for immediate settlement.
Online credit decisions are completed within a minute.
Michal notes that the eligibility criteria are very simple.
“SMMEs that are eligible for this type of finance have been operating for more than a year, are registered as a CC or Pty, and have an annual turnover between R500 000 and R30 million. International suppliers are settled from as little as R5 000.”
This type of finance is particularly relevant for SMMEs wishing to rebuild after July’s riots in KwaZulu-Natal and Gauteng.
Many goods categories are in short supply after extensive damage to malls, warehouses and factories, and the looting of 3000 stores. The process of bringing goods into the country must begin again, with business owners having to fund imports and freight forwarders.
“We take risk where it matters by helping smaller businesses that have little security and struggle to get funding. We pay suppliers when sales aren’t yet guaranteed, and take risks where no one else would consider it. We are intent on helping those businesses that are locked out of the market at a time when South African businesses need all the support that they can get.”
The fintech claims they have already paid almost 500 suppliers by offering various forms of trade finance. Typical international deals include a South African business that imports Covid-19 medical equipment. Another business imported raw materials for small-scale manufacturing, whereas others have been importing exclusive products for resell.
Trade finance solutions assist businesses that trade goods and materials. When there is a time lag between paying foreign suppliers and receiving payments from local customers, businesses may struggle to meet all their financial commitments due to a cash flow mismatch.
A trade finance solution settles the seller on behalf of the buyer. The buyer benefits from extended repayment terms, while the seller benefits from immediate payment.
International trade finance can help a business increase revenue, decrease competition, create easier cash-flow management, and benefit from currency exchange if bought at the right time at fixed costs.
