South African bank Sasfin has introduced a new trade finance offering to SME clients, having acquired an equity stake in fintech startup Payabill.
Payabill is a digital lending platform that provides working capital and trade finance to small businesses. Launched in 2017, the fintech firm brands itself as a digital and cost-effective alternative to factoring. It allows suppliers to offer better payment terms to buyers while receiving early financing for their invoices.
Sasfin, meanwhile, launched a digital banking platform for SMEs last year, called Beyond. It offers cash management tools, analytics functionalities, payroll management services and invoicing capabilities, and allows companies to create and submit account applications without having to set foot in a branch.
Through the partnership with Payabill, the bank’s SME clients will now also be able access invoice financing digitally via Beyond, or directly through Payabill.
In a statement, Sasfin CEO Michael Sassoon says that while the bank has always offered a trade and debtor finance solution, this was largely for more established businesses.
“The new offering speaks to smaller businesses that are passionate about growth, and our larger trade and debtor finance offering will be there to support businesses that reach the next phase in their development,” he says.
He adds that the two parties are working on a “host of additional digital initiatives” to further help small businesses thrive.
Currently, Payabill offers loans of up to R150,000 (US$10,800) to businesses, but will be able to increase this limit as a result of the investment by Sasfin, which is also investing debt into Payabill.
Explaining the idea behind Payabill, the firm’s CEO Eli Michal says: “We all know that boosting small business creates jobs and enables growth. Traditional lenders have neglected this segment of the market due to the high costs associated with onboarding and assessing these customers, as well as managing their credit risk. It made no sense to us that a retail consumer could get multiple forms of credit, almost instantly via electronic channels, but small businesses could not. With this in mind, we set out to build a completely paperless, digital solution to address this market’s unique requirements.”
While Payabill is one of the first of its kind in South Africa, it is among a sea of fintech firms globally tapping into a booming invoice financing market. As a result, a growing number of traditional banks have also been looking to capitalise on the trend, investing in these firms to expand their own offering and stop the flight of SME customers towards alternative financiers.
In the UK, for example, Barclays recently acquired a minority stake in a MarketInvoice, Europe’s largest online invoice financing platform, in order to grow its asset base in the small business segment.