Why Access to Finance Requires Better Business Information

A distributor wins a larger order and needs to buy stock before its customer pays. Its bank statements show regular deposits, but the lender cannot tell which deposits are sales, which are owner transfers, or when the customer’s outstanding invoices will be paid. The distributor may have a viable order, yet the lender still needs evidence that the business can repay on time.

Separate the funding gap from the evidence gap

A supply constraint arises when lenders have limited funds for a sector, offer repayment terms that clash with the business’s cash cycle, or require security the business cannot provide. Creditworthiness is a separate question. It concerns the business’s ability and track record of repaying. Incomplete records can make a viable business difficult to assess, while reliable records can also reveal that a proposed loan would strain cash flow.

What Zimbabwe and Zambia show

Zimbabwe’s FinScope MSME survey found that financial inclusion improved largely through transaction services such as banking and mobile money, while access to formal credit declined compared with the previous survey. A payment account gives businesses a way to transact, and its records can help explain cash movements. Lenders still need to see how those movements relate to sales, obligations and repayment capacity. Zimbabwe FinScope MSME survey findings

Zambia’s Credit Guarantee Scheme addresses a different barrier. It shares default risk with partner financial institutions to help viable businesses that lack adequate collateral. The scheme illustrates how risk sharing can address a security gap, while the business still needs to show that its operations can support repayment. Zambia Credit Guarantee Scheme

Build a funding case around the cash cycle

The distributor matches sales invoices to bank and mobile-money receipts, separates owner transfers, and lists outstanding invoices by expected collection date. It then forecasts when stock must be paid for and tests whether it can meet repayments if a major customer pays late. This gives the lender a clearer basis for assessing the request and helps the owner judge whether the proposed facility fits the order cycle.

M&J Africa can help you reconcile your records, build a cash-flow forecast and prepare a funding case that explains what the business needs and how it plans to repay. Get in touch to discuss your funding readiness and enquire for a tailored quote.