Reasons SMEs remain small – and how one company is solving this problem

One of the problems facing South Africa’s small and medium-sized enterprises (SMEs) is how to grow into the international market.

Those already involved in exporting often find it difficult to crack new markets. They are over-charged by the banks for forex, have trouble securing trade finance, and even greater difficulty building an overseas network of customers and suppliers. This inevitably means these companies remain small.

80eight quickly discovered a huge need among SMEs for these types of services. Specifically, how to access trade finance without the usual run-around they get from the banks, where credit committees often deliberate for months on whether or not to extend finance.

SMEs face another problem in cracking overseas markets. They’re up against some hefty competition from bigger players and lack the muscle and network to get a foot in the door.

A recent study by the Centre for Development and Enterprise found that just 20% of SA manufacturers export at all, and of these, more than half export less than 5% of their output.

“That suggests to us that SA companies are unable to compete internationally because the margins are too low, or they lack access to the finance or the overseas business networks,” says Faadil Moti, CEO and co-founder of 80eight.

“Our business model upends that. With most of our customers we are able to assist them to lower the costs of trade finance and payments so they care able to improve margins. This makes a huge difference to company profitability.

“Unlike traditional banks, we offer tailored solutions specifically for SMEs and businesses involved in international trade. We found the biggest need among SMEs was assistance in growing their businesses and finding new markets. That’s where we have a critical advantage. For those involved in exporting, we can connect them to a wider network of customers, and the same for those importing – we have over the years built up a sizeable network of suppliers that we can plug our customers into to find better prices, grow their markets, and increase profits.

“We’re not just a payments provider. We are a strategic partner for SMEs and businesses navigating global trade.”

There’s a lot of fancy technology behind this to render a seamless and fast payment process. But the result is a substantial saving on global payment costs.

It helps that 80eight is licensed by the Financial Sector Conduct Authority as a financial services provider.

50% cheaper than the banks on forex fees

One way it assists customers is by offering them much cheaper forex rates than the banks – up to 50% less, and with full transparency on costs. Banks are not fully transparent in their forex charges, which are hidden in the wide bid-offer spreads they charge their customers. 80eight provides full transparency on these charges, some of which – like the obligatory SWIFT fees – are unavoidable.

Trade finance made accessible

Another way it assists customers is by offering competitively-priced trade finance.

This is often the biggest challenge facing smaller businesses trying to break into the global market. Traditional trade finance products offered by the banks are costly and usually reserved for those with a long-standing business track record.

80eight has made it possible for smaller clients to access the global market by offering them trade finance at very reasonable rates.

This, combined with its global payments capability and network of international suppliers and customers, is what sets it apart from its peers, says Moti.

“We have a lot of fascinating case studies of customers who we assisted in finding new and more cost-effective suppliers for the import of items such as clothing and machinery, to name just a few, and the impact this had on their bottom line was immense.

“Other customers have tried for years to find new markets in India, China, the Middle East or Europe and we have been able to help them crack into these markets,” he adds.

“Beyond payments, we provide trade finance and liquidity solutions that help SMEs and businesses bridge cash flow gaps and manage large transactions with ease.

“Then we have our global network for suppliers and distribution, which we use to connect our customers with the right international network, whether for supply or distribution. This helps them unlock opportunities and grow their business footprint.”

Personalised attention

Another differentiating factor is 80eight’s ability to offer personalised service – rather than ask customers to fight their way through a call centre maze.

Customers are allocated to personal relationship managers who do not shift to a new position every month. That means they have the time to get to know your business and come up with solutions that will save costs from Day 1 and suggest opportunities for growth.

“Our business strategy goes far beyond what you would expect from a traditional financial institution,” says Moti.

“We believe we have an edge over the banks in that we offer much lower costs for payments, forex and trade finance, while at the same time providing SMEs with access to much bigger markets … [and] we also facilitate global payments such as remittances and trade settlement.

“We see ourselves more as a business enabler, and payments only form a part of that.”

For more information, contact 80eight here.

Brought to you by 80eight.

Moneyweb does not endorse any product or service being advertised in sponsored articles on our platform.