By: Andiswa Bata, SME Segment Head at FNB.

Accessing the right funding and financing, at the right time, can mean the difference between starting up, staying open, or shutting down.

“The economy is facing a challenging business environment, with slow global growth, economic volatility, and ongoing power supply issues. This means that many businesses in South Africa are still trying to find their financial footing. This is especially true for small businesses, which play such an important role in the local economy. That’s where good credit comes in - as access to the right type of funding and finance can help SMEs grow, innovate, and create jobs,” says Andiswa Bata, SME Segment Head at FNB.

“One of the biggest challenges for SMEs is getting the correct form of funding,” adds Bata as she unpacks practices that small business owners can proactively adopt to enhance an application to a funder.

• Ensure cash is deposited into your business account.

Many SMEs operate on a cash-only basis. The same cash is then used to pay suppliers and the running of the business without making its way into a business account.

As a result, the bank is unable to determine the true profitability of the SME as cash has no paper trail.

By channelling cash and transactions through a business account, a business benefits from accurate record keeping, better financial management, and provides funders with an accurate forecast of revenue generated.

This is particularly important for SMEs who often cannot afford to have an accountant on retainer to produce audited financial statements, so their bank statements / activity is often the verifiable digital track record that allows banks to make lending decisions.

By the same token: keeping personal and business finances separate is helpful, so the business owner can determine the true financial performance of their business. When your personal income is mixed with business income, you don’t know if one is artificially propping up the other.

• Benefits of banking cash also simplifies record-keeping.

Having all business transactions in one place makes it much easier to keep track of accounting records, income tax and audit requirements.

To assist in receiving payments, there are many ways to get paid that are a great way to move from being cash-based to funds reflecting directly in your business account. This is also a safer way to do business without the risk of robberies, fraudulent cash transactions, and high cash handling fees.

• Don’t overlook the housekeeping and governance basics.

This includes maintaining FICA documentation, SARS, CIPC, and others. Additionally: avoid arrears on existing debt, honour debit orders, etc even in your personal capacity as director of the business; these are the simple indicators of good standing that give confidence to any funder of your ability to honour financial commitments.

With the above in place, your business being profitable and you meeting the minimum acceptance criteria, there is no reason why your business should not receive funding.

To read more about the SME White Paper, please Click here.