Document Type Master's Dissertation Author Mbatha, Mthoko URN etd-05262012-201508 Document Title Risks and rewards of providing “reverse factoring” as a financing technology for small and medium-sized enterprises in South Africa Degree MBA Department Gordon Institute of Business Science Supervisor
Advisor Name Title Ms T Pieterse Supervisor Keywords
- cash flow management
- short-term financing
- accounts receivables
- reverse factoring
Date 2012-03-08 Availability unrestricted AbstractThe object of this research was to determine the risks and the rewards of providing reverse factoring as a financing technology for small and mediumsized enterprises (SMEs) in South Africa. There have been a number of financing technologies provided to SMEs in South Africa and reverse factoring has not been taken advantage of. The financing technologies that have been offered range from trade credit, to collateralised loans, overdraft facilities, etc. Most if not all of these technologies are based on some form of security which is usually the SME’s immovable assets. This research project contributes to the body of knowledge that deals with SME finance. A survey was done to find out the views of SME owners, procurement managers, finance managers and financiers concerning the risks and rewards of providing reverse factoring to SMEs. Ten propositions were formulated. A qualitative research methodology, using semi-structured interviews was used to rate the risks and rewards associated with providing reverse factoring.
The results showed that the rewards far outweigh the risks by a ratio of 1: 0.6. For reverse factoring as a financing technology this is positive and is worth pursuing. The risks of lack of collateral and the risk of fraudulent invoices are the most prevalent.
A boost in economic activity in the SME space and the provision of much needed liquidity were the most noted rewards of providing reverse factoring to SMEs in South Africa.
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Please cite as follows:
Mbatha, M, 2011, Risks and rewards of providing “reverse factoring” as a financing technology for small and medium-sized enterprises in South Africa, MBA dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-05262012-201508/ >
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