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Aug 2019
The State of South African
SMEs and Fintech
Business Finance. Simplified.
Agenda
95% of SMEs consist of
1-10 employees; 85%
are 1-5 years old.
Source: SME South Africa, Assessment Of South Africa’s SME Landscape, 2018
South Africa is an international outlier when it
comes to the contribution of SMEs to the economy
Percentage of
businesses that are SMEs
Percentage of GDP (gross
domestic product) from SMEs
Percentage of
employment from SMEs
98.5% 95.0%
South Africa Global Avg.
20.0%
60.0%
South Africa Global Avg.
28.0%
65.0%
South Africa Global Avg.
Source: OECD (Organisation for Economic Co-operation and Development )
TOP DEVELOPMENT NEEDS OF SMES (% SHARE OF SURVEY SAMPLE)
SMEs need support with access to funding & markets
Source: SME South Africa, Assessment Of South Africa’s SME Landscape, 2018
Agenda
SMEs are unable to source the
finance they need because they
don’t have:
A credit gap of R86-346B
exists for SMEs in South
Africa
• The time to spend an average of 36
hours over 5 weeks applying at
banks.
• The necessary documentation and
financial statements available.
• The collateral and surety required by
traditional credit providers.
• The awareness and understanding
of credit products and alternatives to
traditional options.
70%+
60% – 70%
50% – 60%
40% - 50%
0 – 40%
Credit Gap:
Unserved &
Undeserved
SME FUNDING NEEDS BY AMOUNT NEEDED
73% of funding needs are below R1-million; 44% are
for amounts under R250,000
44% of funding needs are
below R250,000
Source: FinFind, SME Access to Finance Report 2018
SME FUNDING REQUESTS BY FUNDING NEED
62% of funding requests are for starting a business,
buying equipment, expansion and working capital
Source: FinFind, SME Access to Finance Report 2018
Late-payments are
a primary cause of
cash flow problems
0 10 20 30 40 50 60
Services (Financial Services)
Retail (Restaurants)
Retail (Apparel)
Retail (Gen. Merchandise)
Retail (Automobiles)
Services (Service Industry)
Retail (Furniture)
Agri/Min./Constr. (Agriculture)
Retail (Hardware)
Wholesale (Durable)
Manufacturing (Wood Related Prod)
Trans-Communic (Trans-Communic)
Manufacturing (Leather/Textile/App)
Wholesale (Non-Durable)
Services (Business Services)
Agri/Min./Constr. (Construction)
Manufacturing (Chem. Petrol. Metal)
Manufacturing (Mach-trans equipment)
Agri/Min./Constr. (Mining)
Agri./Mining/Construction
Manufacturing
Services
Wholesale
Retail
DSO (Days Sales Outstanding) is
the avg. days it takes a company
to collect payment after a sale is
made.
Industries with the worst average
DSOs:
• Mining (52d)
• Construction (43d)
• Business/Professional Services
(42d)
• Manufacturing (39d)
• Wholesale (Non-durable) (39d)
AVERAGE DSO BY SECTOR
Agenda
Fintech in
South Africa
Source: Venture Burn
Cloud Accounting
Wholistic and real-time view of business, get paid faster, better automation
Fintech Lending & Payments
Quicker, better access to finance, increased flexibility and transparency
Open & Digital Banking
New products, cheaper payments, better integrations & automation
SMEs stand to benefit from open banking, fintech
lending & payments, and cloud accounting
Agenda
Spend less time with routine tasks and more
time advising clients
Expense Tracking & Claims
Analytics, Reporting, Auditing
Funding
Inventory, Warehousing
Payments,
POS, eComm.
Other categories:
• Taxes
• Project Management
• Timesheets and time tracking
• Quotes
• Data Syncing
Leverage the app/ISV ecosystem to better
manage your and your clients’ businesses
Prioritise apps that deliver practice and client
efficiencies first
HOW IT WORKS
Example 1 –
Receipt Bank
Extract data without the paper and the
hassle
• Instant item submission
• Accurate data extraction
• Easy ledger publishing
Use advanced automation to unlock capacity
• Set smart rules
• Automate processing and publishing to
Sage
Get in-depth analysis, insights and reports
• Full client visibility
• Optimised practice efficiency
• Assisted reconciliation
2-minutes to apply, funds
disbursed within hours. No
paperwork or documents
required.
No lock-in periods or
cancellation charges.
Settle early without penalty
and get a discount.
Single simple fee per
invoice advanced. No
hidden charges like
application/account fees.
Select one invoice or many
and request funds 24/7.
Small invoices as low as
R10k accepted.
Fast Flexible Transparent Convenient
Business finance isn’t new. We’ve just improved on an
existing concept by taking its best qualities and
simplifying the rest. Welcome to the easiest way for
SMEs to get the working capital the need.
Example 2 – Bridgement
Business Finance. Simplified.
To see how Bridgement works,
watch this 1-minute video:
https://www.youtube.com/watch?v=hsiCtQJA8WM
For more information, go to
www.bridgement.com
To join our partner program for accountants, email
partners@bridgement.com
The State of South African SMEs and Fintech - 2019

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The State of South African SMEs and Fintech - 2019

  • 1. Aug 2019 The State of South African SMEs and Fintech Business Finance. Simplified.
  • 3. 95% of SMEs consist of 1-10 employees; 85% are 1-5 years old. Source: SME South Africa, Assessment Of South Africa’s SME Landscape, 2018
  • 4. South Africa is an international outlier when it comes to the contribution of SMEs to the economy Percentage of businesses that are SMEs Percentage of GDP (gross domestic product) from SMEs Percentage of employment from SMEs 98.5% 95.0% South Africa Global Avg. 20.0% 60.0% South Africa Global Avg. 28.0% 65.0% South Africa Global Avg. Source: OECD (Organisation for Economic Co-operation and Development )
  • 5. TOP DEVELOPMENT NEEDS OF SMES (% SHARE OF SURVEY SAMPLE) SMEs need support with access to funding & markets Source: SME South Africa, Assessment Of South Africa’s SME Landscape, 2018
  • 7. SMEs are unable to source the finance they need because they don’t have: A credit gap of R86-346B exists for SMEs in South Africa • The time to spend an average of 36 hours over 5 weeks applying at banks. • The necessary documentation and financial statements available. • The collateral and surety required by traditional credit providers. • The awareness and understanding of credit products and alternatives to traditional options. 70%+ 60% – 70% 50% – 60% 40% - 50% 0 – 40% Credit Gap: Unserved & Undeserved
  • 8. SME FUNDING NEEDS BY AMOUNT NEEDED 73% of funding needs are below R1-million; 44% are for amounts under R250,000 44% of funding needs are below R250,000 Source: FinFind, SME Access to Finance Report 2018
  • 9. SME FUNDING REQUESTS BY FUNDING NEED 62% of funding requests are for starting a business, buying equipment, expansion and working capital Source: FinFind, SME Access to Finance Report 2018
  • 10. Late-payments are a primary cause of cash flow problems 0 10 20 30 40 50 60 Services (Financial Services) Retail (Restaurants) Retail (Apparel) Retail (Gen. Merchandise) Retail (Automobiles) Services (Service Industry) Retail (Furniture) Agri/Min./Constr. (Agriculture) Retail (Hardware) Wholesale (Durable) Manufacturing (Wood Related Prod) Trans-Communic (Trans-Communic) Manufacturing (Leather/Textile/App) Wholesale (Non-Durable) Services (Business Services) Agri/Min./Constr. (Construction) Manufacturing (Chem. Petrol. Metal) Manufacturing (Mach-trans equipment) Agri/Min./Constr. (Mining) Agri./Mining/Construction Manufacturing Services Wholesale Retail DSO (Days Sales Outstanding) is the avg. days it takes a company to collect payment after a sale is made. Industries with the worst average DSOs: • Mining (52d) • Construction (43d) • Business/Professional Services (42d) • Manufacturing (39d) • Wholesale (Non-durable) (39d) AVERAGE DSO BY SECTOR
  • 13. Cloud Accounting Wholistic and real-time view of business, get paid faster, better automation Fintech Lending & Payments Quicker, better access to finance, increased flexibility and transparency Open & Digital Banking New products, cheaper payments, better integrations & automation SMEs stand to benefit from open banking, fintech lending & payments, and cloud accounting
  • 15. Spend less time with routine tasks and more time advising clients
  • 16. Expense Tracking & Claims Analytics, Reporting, Auditing Funding Inventory, Warehousing Payments, POS, eComm. Other categories: • Taxes • Project Management • Timesheets and time tracking • Quotes • Data Syncing Leverage the app/ISV ecosystem to better manage your and your clients’ businesses
  • 17. Prioritise apps that deliver practice and client efficiencies first
  • 18. HOW IT WORKS Example 1 – Receipt Bank Extract data without the paper and the hassle • Instant item submission • Accurate data extraction • Easy ledger publishing Use advanced automation to unlock capacity • Set smart rules • Automate processing and publishing to Sage Get in-depth analysis, insights and reports • Full client visibility • Optimised practice efficiency • Assisted reconciliation
  • 19. 2-minutes to apply, funds disbursed within hours. No paperwork or documents required. No lock-in periods or cancellation charges. Settle early without penalty and get a discount. Single simple fee per invoice advanced. No hidden charges like application/account fees. Select one invoice or many and request funds 24/7. Small invoices as low as R10k accepted. Fast Flexible Transparent Convenient Business finance isn’t new. We’ve just improved on an existing concept by taking its best qualities and simplifying the rest. Welcome to the easiest way for SMEs to get the working capital the need. Example 2 – Bridgement Business Finance. Simplified.
  • 20. To see how Bridgement works, watch this 1-minute video: https://www.youtube.com/watch?v=hsiCtQJA8WM
  • 21. For more information, go to www.bridgement.com To join our partner program for accountants, email partners@bridgement.com