Part 7 of 7 · Act
Your Sixty-Day Action Plan, Contact Map and FAQ
The order matters: fixing operations first reduces what you need to borrow. Most businesses find the gap shrinks materially before any interest is paid.
| Period | What you do | What you should have at the end |
|---|---|---|
| Days 1–10 Diagnose |
Calculate inventory, receivable and payable days; derive the cash conversion cycle and the rand requirement; identify which of the four situations you are in | A number, a diagnosis, and clarity on whether this is a funding or an operating problem |
| Days 11–20 Self-help first |
Tighten invoicing to same-day; verify invoice compliance fields and CSD registration; call every debtor over 30 days; ask three suppliers for extended terms; clear dead stock | A materially reduced requirement before you borrow anything |
| Days 21–35 Prepare |
Assemble the document pack; obtain tax compliance status; reconcile management accounts; clean the debtors ageing; build the twelve-month monthly cash flow | A complete, coherent application pack that needs no chasing |
| Days 36–45 Target |
Shortlist four funders across at least two categories; confirm ticket size, eligibility and turnaround; ask each about guarantees and ESD routes | Four qualified targets with confirmed requirements |
| Days 46–55 Apply |
Submit all four in parallel with a one-page summary leading on the repayment source; log every contact and deadline in one tracker | Four live applications rather than one sequential process |
| Days 56–60 Compare and close |
Request all-in rand costs in writing; compare on total cost and covenants, not headline rates; negotiate surety scope and fees; accept and document | A facility matched to the gap, at a cost you have verified |
Section 14Where to start: a contact map
| If your situation is… | Start with |
|---|---|
| Customers pay slowly and you supply creditworthy buyers | Invoice discounting providers; your bank’s debtor finance desk |
| You have won a contract or tender you cannot fund | Purchase order funding providers; SEDFA bridging finance |
| A recurring monthly shortfall with sound financials | Your bank’s business banking or SME desk — ask for the overdraft, not a loan |
| No collateral but a viable business | SEDFA direct lending and the credit guarantee scheme; ask your bank which guarantee schemes it participates in |
| You supply a large corporate | That corporate’s enterprise and supplier development or procurement team |
| Strong card takings, uneven months | Merchant cash advance providers, for a short and defined purpose only |
| You need equipment and cash is tight | Asset finance providers; your bank’s asset finance division; sale-and-leaseback specialists |
| You are unsure which product fits | A funding marketplace or matching platform, an accountant with SME finance experience, or a SEDFA branch |
| Government is not paying you | National Treasury’s late payment escalation route, with documented submission dates and follow-up correspondence |
Section 15Frequently asked questions
Is working capital finance the same as a business loan?
No. A business loan is usually a fixed-term facility repaid in instalments over years. Working capital finance is short-term and revolving, sized to a temporary gap and repaid as receipts arrive — often from a specific invoice or order. Using a multi-year loan to fund one month of stock leaves you repaying capital long after the stock is sold.
Can I get invoice discounting if my business is new?
Often yes. Invoice discounting assesses your customer’s creditworthiness rather than yours. A young business invoicing a listed corporate, a large retailer or a government department can access discounting when no bank will lend to it, because the funder is relying on your customer’s balance sheet rather than your trading history.
What is the difference between invoice discounting and factoring?
Under discounting you keep the customer relationship and collect payment yourself, so the arrangement is usually invisible to your client. Under factoring the funder buys the receivable and takes over collections, which your customer sees. Factoring costs more once the service fee is included but suits businesses without a credit control function.
Do I need collateral to get working capital finance?
Not for every product. Invoice discounting, purchase order funding, merchant cash advances and asset finance are secured on the invoice, the order, your takings or the asset itself rather than on property. Where collateral is the only obstacle, SEDFA operates a credit guarantee scheme that indemnifies lenders on behalf of borrowers who lack security.
Does sefa still exist?
Not as a separate entity. sefa merged with Seda and the Cooperative Banks Development Agency on 1 October 2024 to form SEDFA. One application now covers what were three separate mandates: finance, business development support and cooperative banking. Many business owners still say “the sefa loan” or “the Seda office”, but both names are now informal.
What is a factor rate and why is it misleading?
A factor rate expresses total repayment as a multiple of the amount advanced. A 1.25 factor on R100,000 repaid over six months means R125,000 repaid — R25,000 of cost on a balance that averages roughly half the principal, which is close to 100% annualised. Factor rates make expensive facilities appear cheap because they hide the repayment period.
Is expensive working capital finance ever worth it?
Yes, when the funded activity earns more than the facility costs. A 40% annualised facility held for six weeks to unlock a profitable contract is a sound decision; a 12% facility funding operating losses is not. Compare the total rand cost against the gross profit the money generates, not the headline percentage.
Can I get working capital finance with bad credit?
Sometimes. Products secured on an asset, an invoice or trading data — asset finance, invoice discounting, purchase order funding and merchant cash advances — weigh the security or the counterparty more heavily than the applicant’s credit record. SEDFA’s credit guarantee scheme also exists specifically for viable businesses that cannot meet collateral requirements.
How long does it take to get working capital in South Africa?
Speed varies by product. Merchant cash advances and fintech facilities take one to seven days. Invoice discounting and purchase order funding take one to three weeks. Bank overdrafts and asset finance take two to four weeks. Bank term loans take four to eight weeks. SEDFA and public finance typically take two to four months.
GlossaryGlossary
| Term | Definition |
|---|---|
| Working capital | Current assets less current liabilities; the money tied up in day-to-day trading operations |
| Cash conversion cycle | Days inventory outstanding plus days sales outstanding minus days payable outstanding |
| Days sales outstanding (DSO) | The average number of days between issuing an invoice and receiving payment |
| Days payable outstanding (DPO) | The average number of days a business takes to pay its own suppliers |
| Invoice discounting | An advance of 70–90% of an approved invoice, repaid when the customer pays; usually confidential |
| Invoice factoring | The outright sale of a receivable to a funder who takes over collections; visible to the customer |
| Purchase order funding | Finance that pays a supplier directly against a confirmed purchase order or tender award |
| Merchant cash advance | A lump sum repaid as a fixed percentage of daily card or platform takings |
| Factor rate | Total repayment expressed as a multiple of the amount advanced; understates the true annualised cost |
| Cession of debtors | A security arrangement under which a funder takes rights over a business’s receivables book |
| SEDFA | Small Enterprise Development and Finance Agency; formed from sefa, Seda and CBDA on 1 October 2024 |
| Credit guarantee scheme | An indemnity issued to a lender on behalf of a borrower who lacks conventional collateral |
| Enterprise and supplier development (ESD) | B-BBEE-scored corporate support to small suppliers, often concessional funding plus mentorship |
| Central Supplier Database (CSD) | The national register of government suppliers; the supplier number must appear on invoices |
| Prime lending rate | The benchmark rate banks charge lowest-risk borrowers; repo plus 3.5% in South African convention |
| Repo rate | The rate at which the South African Reserve Bank lends to commercial banks; 7.00% as at August 2026 |
