Local fintech startup Payabill has developed a product where it takes the risk of settling the bills of international suppliers directly for qualifying small and medium-sized enterprises (SMEs), which apply for the finance solution “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,” says Payabill CEO Eli Michal.
“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,” explains Michal.
“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.”
Payabill has partnered with the Sasfin Forex division to develop the offering.
Payabill allows a business to settle with an international supplier and to negotiate suitable terms of up to 90 days, also accepting pro forma invoices for immediate settlement.
Online credit decisions are completed within a minute.
Michal notes that the eligibility criteria are simple.
“SMEs 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 South African SMEs wishing to rebuild after the recent riots, with many goods categories in short supply after damage to malls, warehouses and factories and the looting of 3 000 stores, he adds.
The process of bringing goods into the country must begin again with business owners having to fund imports and pay freight forwarders.
“We take the risk where it matters by helping smaller businesses that have little security and struggle to get funding,” says Michal.
“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 Africa businesses need all the support they can get.”
Payabill has 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.
Trade finance solutions such as Payabill 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 their financial commitments owing to a cash flow mismatch, notes Michal.
A trade finance solution, however, settles with the seller on behalf of the buyer. The buyer benefits from extended repayment terms while the seller benefits from immediate payment.
Payabill’s charges vary between 1% and 3% of the invoice amount a month.