A new invoice financing strategy set to benefit 5,000 small businesses

Micro, small, and medium-sized businesses (MSMEs) in Kenya will benefit from a new capital financing model that aims to fill the vacuum left by lending institutions.

IMFact and Jobs Platform Brighter Monday’s program, which employs supply chain finance to provide working capital to MSMEs, offers funding to SMEs on the basis of the purchase of the SME’s portfolio of trade receivables.


SMEs lack of access to reasonable funding

The great majority of small businesses do not have access to reasonable funding and according to Brighter Monday, banks are currently unwilling to lend financing to companies that do not have at least three years of audited financial statements due to the present market trend.

IMFact is a smart finance alternative to traditional bank loans for Kenyan SMEs in the supply chain industry. It works by converting debtor portfolios into working capital and other expenses.

IMFact will acquire or finance MSMEs invoices for a mix of upfront cash and deferred payments under the financing model, allowing sellers to obtain cash without having to follow up or wait for invoices to be paid.

“This will free-up capital to buy new inventory, pay suppliers, and grow the business without collateral or guarantees required.” Derrick Lwatati, IMFact commercial director.

Businesses able to rapidly convert their invoices into cash

How IMFact factoring process works

Because it does not demand an upfront investment or guarantees, the concept, according to Lwatati, enables faster access to working capital than invoice discounting, which is often supplied by banks.

Businesses will be able to rapidly convert their invoices into cash following the country’s reopening following a long absence with COVID-19.

The collection of invoices from small businesses serves as security, resulting in a flexible credit facility.

According to the head of business in IMFact, IMFact’s objective is to serve firms in the SME-to-SME value chain in Kenya, and soon in many more African nations, with inexpensive, sustainable, and scalable working capital finance.

IMFact has previously financed clients in the healthcare and logistics industries but has recently expanded to include transportation, agriculture, and food.

Brighter Monday will use its regional network of enterprises and MSMEs to assess acceptable invoices and business entities that qualify for funding as part of the agreement.

Through its partnership with Brighter Monday, IMFact is expected to give money to 5000 SMEs 

 but has not specified the amount of funds that will be advanced to MSMEs in the country.