Most established SME owners know the feeling. You receive a great order, but the reality hits that you don’t have the funds ready to pay for the extra materials and labour to cover it.
These cash flow gaps are costly. They not only deny you the chance to make more profit, but it also means that the order goes to a competitor instead.
Thankfully, several excellent flexible funding providers in South Africa can help you smooth out these cash flow bumps.
Find out about six of them below.
1. Lula Cash Flow Facility
The Lula Cash Flow Facility is a pot of approved funding that sits ready until you need it, subject to an affordability assessment at drawdown. If you have a slow-paying client, for example, you can draw down funds to temporarily cover their payment. You can also use it to buy stock or pay bills if cash is running low at month-end.
If you don’t use it for a while, then that’s fine. There are no monthly account or admin fees and, when you do need it, you only pay for what you use. You also don’t need to reapply if you pay back the money but need to redraw later* (*subject to an affordability assessment).
Lula’s solutions are particularly useful for cash flow gaps because of their speed. After a quick online application, businesses typically get approval within as little as 22 hours. More businesses get approved, too, because Lula uses read-only transaction data and credit history to understand the true cash flow cycles of your business.
When you need a bigger funding limit later, apply for an increase instead of starting from scratch.
To qualify, you need a monthly revenue of R40,000 or more, 12 consecutive months of trading history and a business registered in South Africa that has a South African-registered bank account. If you’re not sure how much headroom your business actually needs, Lula’s guide on how to calculate working capital is a good place to start before you apply for anything.
Best Suited For
Businesses looking for a responsive and flexible funding partner that can help them fill gaps in working capital and seize opportunities at short notice.
2. Bridgement
Bridgement offers facilities from R20,000 up to R10 million, approved on bank statement data rather than a stack of paperwork, and its standby model means it costs nothing while idle.
It also has roots in invoice finance, so businesses sitting on unpaid invoices have a route to turn them into working capital.
Best Suited For
Businesses with slow-paying clients who want capital available without a tedious application process.
3. Merchant Capital
Merchant Capital gets its name from its focus on merchant cash advances. These solutions take repayments as a percentage of your daily card turnover instead of a fixed monthly debit, so you pay more during a busier month than a quieter one.
This rhythm suits businesses whose revenue fluctuates across the seasons, and need varying support at different times.
Best Suited For
Retail, restaurant and hospitality businesses with steady card sales and seasonal cash flow swings.
4. Genfin
Genfin provides unsecured funding of up to R5 million, assessed on recent trading performance through a simple online application. It serves the middle ground well: businesses that have outgrown microfinance but can’t yet (or don’t want to) deal with institutional lenders.
Best suited for
Small businesses that have proven revenue, but prefer not to provide collateral to secure the funding.
5. GroWise Capital
GroWise Capital looks past what your business owns to assess how its performing when it comes to its lending decisions.
Its fast, unsecured funding is great for retail, manufacturing and services businesses, which often have their cash tied up in stock, equipment or unpaid invoices rather than sitting in the bank.
Best Suited For
GroWise has a plain-spoken approach for explaining its products, which suits owners who want a no-fuss funding decision without putting assets on the line.
6. Merchant West
Merchant West specialises in working capital solutions that cover shortfalls in your cash flow. They also offer financing options that pay your suppliers directly so you can keep the flow of goods moving while keeping cash in your account.
If you find that cash tends to run short at the supplier end, then this is a useful option.
Best Suited For
Importers, wholesalers and stock-heavy businesses that need supplier payments covered ahead of sales.
Finding The Right Fit
The best cash flow solution depends on where your pressure comes from. Slow payers point to invoice finance, while seasonal card sales typically guide you towards a cash advance.
For general-purpose flexibility, a facility like Lula’s Cash Flow Facility is hard to beat: its funding is fast, flexible and affordable for established small businesses. Their friendly customer service and educational material can even help you to prepare for financing, such as how to ensure your SME is approved for business funding.
Cash flow problems aren’t always a sign of a bad business. They can be a sign of a growing one. The right solution can help you do the latter more effectively.
