{"id":23694,"date":"2022-06-30T16:30:42","date_gmt":"2022-06-30T16:30:42","guid":{"rendered":"https:\/\/www.africa-press.net\/namibia\/all-news\/invoice-discounting-facilities-enhance-cash-flow-management"},"modified":"2022-06-30T16:46:31","modified_gmt":"2022-06-30T16:46:31","slug":"invoice-discounting-facilities-enhance-cash-flow-management","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/namibia\/all-news\/invoice-discounting-facilities-enhance-cash-flow-management","title":{"rendered":"Invoice discounting facilities enhance cash-flow management"},"content":{"rendered":"

Africa-Press – Namibia. <\/strong><\/span>It is no secret that poor economic conditions and Covid-19 have a significant impact on business cash flow.<\/p>\n

Debtor difficulties have been a significant root of the problem, as business closures have been widely reported.<\/p>\n

As a result, running a business has become even more challenging, necessitating participation in cash flow management programmes.<\/p>\n

Businesses now have a lot of money trapped in unpaid invoices, and entities of all sizes are scrambling to figure out how to access those funds to avert a negative cash flow curve.<\/p>\n

Invoice discounting is one method that businesses can use to offset negative cash flows.<\/p>\n

Simply put, invoice discounting is a debtor management solution that aims to unlock the untapped growth potential in a debtor\u2019s book.<\/p>\n

When a company\u2019s unpaid invoices are used as collateral for a loan, invoice discounting is referred to as an invoice finance facility.<\/p>\n

It specifically allows them to leverage the value of their sales ledger.<\/p>\n

In times of poor cash flow, which have led to businesses closing their doors or retrenching employees, invoice discounting is a crucial concept.<\/p>\n

According to data from the Ministry of Labour, Industrial Relations and Employment Creation, 12 000 individuals were laid off from 896 enterprises in 2020.<\/p>\n

Among these cases, 9 158 were due to economic factors.<\/p>\n

When invoices are unpaid, the sustainability of the business is threatened and employees suffer.<\/p>\n

Managing debtors\u2019 accounts can be time-consuming and expensive.<\/p>\n

Cash flows are often a matter of timing, and even profitable businesses with a good strategy for collecting cash from its customers may experience cash flow pressures and eventually fail.<\/p>\n

In times when cash flow and debt are currently a pandemic in the operations of various businesses, companies are encouraged to explore any business-rescuing mechanisms available to them.<\/p>\n

A survey by the Namibia Statistics Agency (NSA) in 2020 indicated that 63.7% of businesses had reported revenue loss of over 50%, with the manufacturing sector (20.1%), hotels and restaurants (15.2%) as well as construction sector (11,3%) being affected the most.<\/p>\n

This happened at a time when collecting cash from debtors was an almost impossible task due to a slowdown in business operations, as the effects of Covid-19 worsened the troubles already created by poor economic conditions.<\/p>\n

Suppose a business could access the money that is tied up in invoices due for payment.<\/p>\n

If that were possible, the business could negotiate better terms with suppliers or gain access to much-needed working capital.<\/p>\n

Boosting cash flow is necessary to enable the growth of a business; for example, when bringing a new product to market, funding an expansion or covering ongoing marketing expenses.<\/p>\n

Therefore, in these dire times, invoice discounting must be at the forefront.<\/p>\n

For it to happen successfully, it requires the backing of a financial institution.<\/p>\n

Nedbank Namibia has developed a concept of invoice discounting that is tailor-made for struggling local businesses.<\/p>\n

The Nedbank invoice discounting programme is created with the sustainability of a business in mind to enhance processes and cost efficiency.<\/p>\n

It can assist a company to seize an opportunity while at the same time making it possible to negotiate improved banking terms.<\/p>\n

To date, Nedbank\u2019s invoice discounting has released up to 80% of a company\u2019s debtors\u2019 book, making it an important solution for struggling enterprises to consider in order to maintain timely payment of salaries, expenses and vendors\u2019 invoices.<\/p>\n

There are many businesses that look excellent on paper or in the eyes of the public, while their existence and future prospects are actually being threatened by cash flow pressures.<\/p>\n

Such entities are encouraged to turn to invoice discounting for help.<\/p>\n

In order to stimulate opportunities and growth for cash-strapped businesses, Nedbank invoice discounting further offers a critical funding source for expansion or paying for ongoing operational costs.<\/p>\n

It is especially helpful in preventing business owners from using their personal assets and savings to keep their companies afloat.<\/p>\n

Partnering with a financial institution can equip a business better to manage debtors and absorb risk.<\/p>\n

For an SME, it can materially improve the burden of debtor administration \u2013 and for a larger organisation, it can perfect the discipline of optimal daily cash management.<\/p>\n

*Tjivingurura Mbuende is Nedbank Namibia\u2019s Executive for Corporate and Investment Banking.<\/p>\n

For More News And Analysis About Namibia<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Namibia. It is no secret that poor economic conditions and Covid-19 have a significant impact on business cash flow. Debtor difficulties have been a significant root of the problem, as business closures have been widely reported. As a result, running a business has become even more challenging, necessitating participation in cash flow management […]<\/p>\n","protected":false},"author":84,"featured_media":23693,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,6,8,16],"tags":[234,236,233],"class_list":["post-23694","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-files","category-homepage-english","category-twitter","tag-africa-press","tag-africa-press-namibia","tag-namibia"],"yoast_head":"\nInvoice discounting facilities enhance cash-flow management - Namibia<\/title>\n<meta name=\"description\" content=\"It is no secret that poor economic conditions and Covid-19 have a significant impact on business cash flow. 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