ZEEX launches invoice discounting to address cash flow challenges for Zimbabwean SMEs
The Zimbabwe Entrepreneurship Exchange ZEEX has introduced an Invoice Discounting Marketplace to help small and medium-sized enterprises SMEs in Zimbabwe overcome cash flow issues caused by long payment terms. Many SMEs wait 30 to 90 days for payment from clients like supermarkets, mining companies, manufacturers, and government institutions, which hinders their ability to pay employees, suppliers, and fund new orders. ZEEX's platform allows businesses to sell approved invoices to investors at a discount, providing immediate working capital. Justin Bgoni, Zimbabwe Stock Exchange Holdings chief executive officer, stated that US$50 million has already been committed by investors for these transactions. This method differs from traditional bank lending as it focuses on the quality of the receivable rather than requiring collateral. For example, a furniture manufacturer can sell a US$100,000 invoice due in 60 days to an investor, receiving immediate funds to continue operations. This innovation shifts the financing focus from property ownership to the reliability of the invoice and the customer's ability to pay, making supply contracts with reputable entities financeable assets. Invoice discounting is expected to be a significant game-changer for fast-growing businesses, enabling them to finance new contracts without being constrained by unpaid invoices. For investors, it offers a different risk profile by financing invoices linked to genuine commercial transactions. This product
