FNB facility helps SMEs pay tax on timeBy GIFT NDOLWANE
JOHANNESBURG, (CAJ News) – FIRST National Bank has given small and medium sized enterprises (SMEs) struggling to pay their taxes a major boost by introducing a new facility to improve their cash flow.
The new facility, Selective Invoice Discounting, recognises that small and medium-sized businesses in South Africa are strapped for cash as their funds are often locked in invoices that have not yet been paid by the time they must settle their tax dues.
FNB note that of late, SMEs have claimed inability to repay loans and to obtain tax clearance certificates from the South African Revenue Service (SRAS) for tendering purpose due to late payment.
Michael Naidoo, Chief Executive Officer of FNB Specialised Finance, concurred businesses should consider using Selective Invoice Discounting to release funds and improve cash flow.
Selective Invoice Discounting can allow businesses to increase turnover, improve cash flow thus improving their total profitability.
Naidoo said invoice discounting was a short-term finance solution that gives businesses access to cash while their invoices are yet to be paid.
“At any one point there may be multiple invoices that are pending or about to be paid. These invoices are access points to cash. Either one invoice or multiple invoices for selected quality debtors are ‘sold’ to release funds and improve cash flow,” Naidoo said.
“If used correctly, Selective Invoice Discounting can be a funding solution that will help to accelerate the cash flow to businesses which need extra working capital to enable growth or to be able to take advantage of a current market opportunity,” concluded Naidoo.
The facility can be used on multiple occasions to meet the business’ working capital needs. Once an invoice is settled, the client will have no further obligations to the bank, but the facility remains available for future use. This will be deployed on an invoice-by-invoice basis. Cash can be released within a maximum of 48 hours after completion of take-on process.
Naidoo said there were alternative funding solutions such as overdrafts, loans or enterprise development funds and it’s up to the business owner to investigate all options thoroughly in order to make the right choice. – CAJ News
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