Contracts, we all want one. It gives us security of revenue and helps to contribute to the sustainability of our businesses.
However, there is generally one concern – how will I fund this contract while I wait for my customer to pay me?
While contracts are very appealing and can help to sustain [especially small] businesses, the need to source products in order to service the contact, and the payment terms customers generally want, put a strain on cash flow and can even mean that it becomes impossible to deliver.
For empowered companies (51% black ownership), the solution may be quite simple – contract financing from Developmental Funding Institutions DFIs. The objective of procurement finance is to ensure that qualifying SMEs have the capacity to carry out the contracts.
Finance is available for the duration of the contract up to R10million and can even fund the acquisition of assets and working capital needs of the business to support the growth of SMEs.
So, if you have been awarded a contract by a reputable organisation (this includes government, quasi-government organisations and listed companies) and need some funding to support your business in delivering on that contract, speak to a professional that understands how contract financing at DFIs works and can guide you through this process.