The new financial revolution – UsPlus

Financial institutions should be seen as living organisms.

They go through night and day, adapting to the changing environment around them in order to survive to see another dawn.

In times of prosperity, mainstream banks around the globe tend to be generous, but in times of struggle, global mainstream banks understandably tend to go into survival mode.

While this may be good for their durability, it is not good for the economy, because regardless of whether times are good or tough, society has no option but to keep going.

The economy is made up of millions of individuals who are constantly moving and hustling to keep things ticking over while providing for their families.

SMEs are particularly valuable to the economy as, according to the International Finance Corporation, SMEs are responsible for between 75% and 90% of the employment opportunities generated in emerging economies.

SMEs need access to finance to grow their operations, so when banks go into survival mode, it has a major impact on the ability of these businesses to keep the economy going.

According to the South African Reserve Bank, “Financial conditions in South Africa tightened significantly in March 2020 as heightened risk aversion in financial markets resulted in falling asset prices, higher borrowing costs and exchange rate weakness.”

Financial institutions are the oil that keep the cogs of the economy turning, and if they are in a conservative frame of mind, a tough economic situation becomes a whole lot more difficult.

What determines whether your company lives or dies

Raising finance for your business is an essential component of growth, and is usually done with the help of a bank.

Approximately 80% of most bank’s balance sheets are made up of secured loans which are backed by a security of some kind, meaning that your company needs to own a property or have assets that the bank can use to secure their exposure should you be unable to pay back your loan.

If your business can’t do this, it will be difficult for you raise money for your company.

UsPlus works on the front lines of the economy every day, and is in touch with many companies on a weekly basis.

Most of them are headed up by good, honest South Africans who want to create opportunities and prosperity.

The hard fact, though, is that most companies struggle, and this is usually because of a lack of access to capital.

The invoice revolution

UsPlus has therefore built a successful financial institution based off of one simple principle – a company’s most valuable collateral is actually its invoice.

The ability of a company to leverage its invoices to get access to working capital is very restricted by the banks, as they tend to be very risk adverse.

It is for this reason that globally, there has been an explosion of impact funds that are looking to support non-banking financial institutions (NBFIs).

It is these NBFIs that have become the lifeblood of SMEs the world over and this has led to extensive job creation and innovation.

How UsPlus grows businesses

In the experience of UsPlus, most businesses here are run by good, honest South Africans, but the harsh realities of the economy often prevent them from achieving their goals.

Large corporations will usually agree to pay invoices 30 days from statement, which in reality is usually more like 45 days from invoice.

The small business then has 45 stressful days ahead of it in which it must pay wages, service debit orders and make the rent, all while waiting to be paid for their work.

They often cannot take on new work during this time.

This is where UsPlus comes in.

If the small business invoiced the large corporate for R100 to be paid in 45 days, UsPlus purchases the invoice from the small business for R97 today, giving them immediate access to cash flow.

In 45 days when the invoice is due, the large corporate then pays UsPlus the R100 they were going to pay to the small business.

UsPlus makes its margin, the small business can scale up, and the transaction has absolutely no effect on the large corporate.

About UsPlus

UsPlus is a finance organization with a heart.

It believes in the South African economy and supports the people who keep it going.

Over the last seven years, UsPlus has provided over R2.3 billion in funding to companies across over 40 industries, while supporting over 7,000 jobs.

UsPlus is a JSE-regulated company that operates according to the highest standard of corporate governance.

Most importantly, it is a values-based organization which helps companies that have some sort of positive impact on the society around them.

For more information about UsPlus and how it can help grow your business, click here.