For an entrepreneur, there are few things more debilitating than winning a contract or tender and not having the working capital to help them fulfill the deal. Many are not aware that there are a number of unique funding solutions to help.
When it comes to the supply and delivery of physical goods, many entrepreneurs come un-stuck with simply coming up with the cash for purchasing the goods they need to sell.
Take for example the supply of 200 pairs of army boots as part of a tender at a unit price of R1250 per pair. That will mean that the entrepreneur has to come up with R250 000 in cash-flow and then package and deliver to the client.
While government has made a commitment to try and support SMEs by paying timeously, the reality on the ground is that they often don’t make their commitment to pay on 7 days and this leaves the entrepreneur out of pocket.
The entrepreneur has the opportunity to bring on a financing partner who will help with the fulfilment of the order (IE the funder will buy the army boots and ensure delivery against your tender) and then pay out your share of the net profit, less their fees.
This kind of funding is a great way to gradually build up scale without taking on expensive credit facilities.
Considerations when applying for this kind of financing:
- You need a trading history:Typically you won’t be approved without 1 year of audited financials
- Trustworthy client: Your client will typically need to be a corporate with an established trading history of its own or a government institution which will pass credit scoring standards
- You need a tender / purchase order:“Letters of intent” or “Draft agreements” carry little or no weight. The requirement will be a formally issued order from the institution
If you need this kind of financing, complete the form below with your details and our team will be in contact with you shortly to discuss further.