The Financial Securities Exchange (Finsec) has unveiled an innovative invoice discounting service through its private markets platform, aimed at enhancing financial liquidity for local businesses.
This initiative seeks to provide essential working capital for suppliers of goods and services who frequently encounter protracted payment cycles, allowing them to convert pending invoices into immediate cash.
Finsec’s move to introduce invoice discounting is part of a broader strategy to promote alternative financing solutions that support businesses and foster a more dynamic, resilient economic landscape.
The service is available via Finsec’s online platform, offering a streamlined, digital-first application process.
Businesses can submit their Know-Your-Customer documents and outstanding invoices online to receive an upfront, discounted payment.
Upon maturity, the buyer settles the full invoice amount directly with Finsec.
“Businesses can submit their Know Your Customer 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,” an update read.
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.
- ZMX to enhance farm profitability
- ZMX to enhance farm profitability
- ZSE All Share Index declines
- Smartvest on the market to raise US$10 million
Keep Reading
The key features of the offering include facility invoice discounting, an invoice tenure of up to 60 days, targeting businesses with invoices from reputable buyers, with the indicative rates being competitive and varying according to demand and supply.
Finsec said the initiative is a crucial development for Zimbabwe’s economy, particularly for its burgeoning Small and Medium-sized Enterprise (SME) sector.
“Many SMEs [small and medium enterprises], 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,” Finsec said.
The initiative also enhances structure and confidence within the alternative finance sector, connecting businesses in need of capital with a network of reputable financiers and investors through the Private Markets platform.
While Finsec has not disclosed specific companies that have utilised the platform, the target market is clear, with suppliers to large corporates and fast-moving consumer goods companies set to benefit significantly.
The advantages for large corporates using this service stem from their business models, which often involve extended credit terms, particularly for 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.”
