FINSEC operates invoice discounting platform to boost business liquidity

STAFF WRITER

In a significant move to bolster the financial liquidity of local businesses, the Financial Securities Exchange (FINSEC) is now actively offering Invoice Discounting through its innovative Private Markets platform.

This initiative is set to unlock critical working capital for suppliers of goods and services who often face challenging long payment cycles, turning their pending invoices into immediate cash.

The service is accessible via FINSEC’s online platform, privatemarkets.finsec.co.zw, providing a streamlined, digital-first application process.

Businesses can submit their Know Your Customer (KYC) documents and outstanding invoices online to receive an upfront, discounted payment.

The buyer of the goods or services then settles the full invoice amount directly with FINSEC upon maturity. According to promotional materials released by the exchange, the Invoice Discounting facility is designed to be a fast and hassle-free solution for businesses to enhance their cash flow and seize growth opportunities.

Key features of the offering include:

• Facility: Invoice discounting
• Invoice Tenure: Up to 60 days
• Target Market: Businesses with invoices from reputable buyers
• Indicative Rates: Competitive and vary with the demand and supply

A Vital Lifeline for Zimbabwean Businesses

This initiative is a crucial development for Zimbabwe’s economy, particularly for its burgeoning Small and Medium-sized Enterprise (SME) sector.

Many SMEs, the engine of economic growth and employment, are often hampered by a lack of access to traditional financing and the strain of waiting for 30 to 90 days for invoices to be paid.

This delay can stifle operations, prevent new orders from being taken on, and impede overall expansion. By providing immediate liquidity against confirmed invoices, invoice discounting services like the one offered by FINSEC address this critical pain point. Businesses can unlock cash tied up in their accounts receivable to cover immediate operational expenses, pay salaries, purchase raw materials, and invest in growth without having to provide the collateral typically required for conventional bank loans.

The introduction of such financial instruments by a registered securities exchange also brings a new level of structure and confidence to this form of alternative finance, connecting businesses in need of capital with a pool of reputable financiers and investors through the Private Markets platform.

Businesses Poised to Benefit While FINSEC has not disclosed the names of specific companies that have utilized the platform, the target market for this service is clear.

Popular business types that stand to benefit significantly from this initiative include:

• Suppliers to large corporates and fast-moving consumer goods (FMCG) companies: These businesses often operate on extended credit terms and can use invoice discounting to maintain a steady cash flow.
• Government contractors and suppliers: Businesses providing goods and services to government departments can face lengthy payment processes, making a facility like this invaluable.
• Service providers in sectors like marketing, IT, and professional services: These firms can ensure operational continuity while awaiting payment from their corporate clients.
• Manufacturing and distribution companies: Access to immediate cash can help these businesses manage their supply chains and production cycles more effectively.

The move by FINSEC to offer invoice discounting is part of a broader focus on alternative financing solutions to support businesses and foster a more dynamic and resilient economic environment.