BUSINESS DAY SPOTLIGHT
PODCAST | How to better manage working capital
Mudiwa Gavaza is joined by Tokelo Matlou, from Addendum Financial Technologies
In this edition of Business Day Spotlight, we’re looking at how supply chain financing and working capital are affecting businesses in an economy ravaged by Covid-19.
Host Mudiwa Gavaza is joined by Tokelo Matlou, from Addendum Financial Technologies.
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Addendum is a supply chain financing specialist company with operations in SA, Nigeria, Kenya and Zambia.
One of the biggest funding issues facing small businesses is the amount of time it takes for bills and payments to be made. Payment terms for supplying services and products, often come with 30, 60 or 90 day time frames. This can be especially crippling to a small business that have to wait for up to three months to receive money for services rendered, while business expenses continue to fall due.
Addendum provides companies and their suppliers with working capital solutions. Working capital refers to money that is available to a company for its day-to-day operations.
Matlou says the company allows suppliers to receive early access to funds after rendering a service. Addendum makes money by taking the difference between the funding amounts offered by buyers and the amount taken by suppliers, so the aim is usually to drive more transactions, thereby increasing volumes.
Given the effect of Covid-19 and subsequent lockdowns, Matlou says they have seen similar trends in SA other countries in which they operate, around working capital. One such trend they have observed is that in an effort to preserve cash and also reduce risk, suppliers are seeking shorter, more immediate payment terms, while buyers are trying to lengthen the amount of time they have to pay their suppliers, as a way of freeing up working capital.
Matlou spends time talking about the business model, relationship with suppliers and buyers, their financing programmes, their use of technology and an outlook for working capital issues, given the state of the economy.
The discussion ends with Matlou explaining the challenges his company faces in educating businesses about its offering.
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