Sourcefin’s Impactful Conversation on POWER 98.7: Empowering SMMEs in South Africa

The full interview transcript

Noluthando Mthonti-Mlambo (POWER 98.7 POWER BUSINESS Host)

As we do here on power business every single Tuesday, we spend some time speaking to small businesses or about small businesses. An important part of our part in making sure that those who are said to be the backbone of this economy are getting the necessary, you know, plugs and even airtime that is necessary to help their businesses grow. So today we are speaking to Sourcefin. Joshua Kadish is in studio, director and chief operations officer at the company, to speak to us on a partnership that they’ve embarked on with local government to assist SMMEs, but also finding out what Sourcefin does and also their ability to possibly meet other needs that may have that is, needs out there and may have. Joshua thank you for your time. Good evening.

Joshua Kadish (Chief Operating Officer and Director at Sourcefin)

Good evening. Thank you so much for having me.

Noluthando Mthonti-Mlambo (POWER 98.7 POWER BUSINESS Host)

Wonderful. Joshua, maybe. We can start off by talking about Sourcefin What exactly does Sourcefin do?

Joshua Kadish (Chief Operating Officer and Director at Sourcefin)

Sure. So, Sourcefin is a company that’s been established over the last two and a half years and we are purchase order finance specialists, really what we are is we are a company which looks to tackle some challenges faced by SMMEs and we look at the full suite of services that are available. Financing is of course the foremost, most needed, but you also have your supply chain management, your professional delivery, your project management. So Sourcefin is really a home for an SMME to come to and receive all of those aforementioned services and really be given an opportunity to deliver and meet what their promises.

Noluthando Mthonti-Mlambo (POWER 98.7 POWER BUSINESS Host)

Wonderful. So, talk to us now about, you know, partnering with a local government. I do assume that that would be a very a partner that’s very much in line with what you do.

Joshua Kadish (Chief Operating Officer and Director at Sourcefin)

Yeah, we are super excited to be able to announce this and there’s a lot of work that went into it. In the past City of Joburg and the DED found that they were facing some pressures in dealing with different private and public companies who provide support in different areas. So, your finance house wouldn’t necessarily be the same company that would help you on your supplier network or you know on your project management, and they soon identified Sourcefin as a really strategic collaborative partner who they could partner with to ensure that their SMMES that they are awarding their contracts to and who they’re working with can get the full suite benefit. So, a lot of work went into it. We we’re very proud to announce that collaboration as of the end of March and already it’s proving really successful. We’ve had quite a lot of SMMEs coming through already and receiving first class support from us.

Noluthando Mthonti-Mlambo (POWER 98.7 POWER BUSINESS Host)

So, I mean, Joshua, tell us about what the support looks like, is it hand holding you know, is it OK? Let’s look at the contract. You know how hands on. Would you then be with the SMMEs that you assist?

Joshua Kadish (Chief Operating Officer and Director at Sourcefin)

Sure. It’s a great question. So, I guess what we don’t want to do is we don’t want to be a silent partner like a bank who’s going to deposit money in your account, hit you with an invoice at the end of every month. If you face challenges, maybe you’re not getting paid on time by your end user. Maybe your supplier had some delays. You’re going to just feel interest racking up against you to the point where maybe that the deal that you took on wasn’t even profitable. That’s not us. What we do is we want to be a place where you come if what you need is purely finance, that’s fine. If you’d like us to open up our expansive supplier network, see if we can get you cost savings, allow you to use our project managers and our team to go and make sure that you carry out what the order is, we there for you. So, we a team of young professionals from different professions and industries. And we really are partner as opposed to just a financial institution offering a once off, you know financial contribution.

Noluthando Mthonti-Mlambo (POWER 98.7 POWER BUSINESS Host)

I must ask you Joshua. You work with SMMEs every single day, is financing really that big of a deal, you know? Is it something that is really a, you know, letting SMMEs go by the wayside going under? Is that really the main issue or the other issues and then then financing is one of?

Joshua Kadish (Chief Operating Officer and Director at Sourcefin)

Yes for sure. So, what I’ve noticed is financing is definitely a problem there. It is a big bridge and a hurdle for them to cross. I think part of the problem is that a lot of the traditional lenders are very much looking retrospectively at your history and looking at your affordability and what security you can offer. So, they’re not necessarily looking at the opportunity you have in front of you and where you’re going to go forward. So, finance to start off with is an issue, but then you correctly point out there are other challenges. The big ones about having the confidence as an SMME to actually fulfil these orders, to fulfil your promise and knowing what to do and where to go. So, I find that it’s probably a balance. And also, the confidence that comes with it when you partner with someone like Sourcefin in your corner, you have a team of lawyers, you’ve got actuaries, you’ve got an accountant, you’ve got all of these different people who are now on your team. We’re sitting on your side of the table and we there to negotiate on your behalf and make sure that you’re aware of any of the pitfalls available and that you can go out and make sure that you deliver on your promise.

Noluthando Mthonti-Mlambo (POWER 98.7 POWER BUSINESS Host)

It’s very interesting this approach that you have taken Josh, and I’m keen you know from Sourcefin’s perspective, the drive to build this model that is so it’s first, it’s comprehensive, which is very, very important, but just, you know the drive to assist SMMEs in in this regard was that from you know sitting with enough SMMEs to know that the issues were way more complex than what we’re hearing because you don’t hear that SMMEs have a consulting firm that helps them with PO’s and lawyer and the legal staff and all of it.

Joshua Kadish (Chief Operating Officer and Director at Sourcefin)

Absolutely. So through experience, definitely I think where we also have the wealth of knowledge on our board of directors. So we’ve got directors who understand what it is to run a business, to be an entrepreneur that’s been awarded a contract and you know we took that experience. We built it out and within the two years we’ve been super flexible in terms of taking into account. What it is our clients need and want and making sure that we can provide them with a model that will cater for that. So we don’t want you to look anywhere else. We want you to come to Sourcefin. Then we want to make sure that you were able to deliver on that contract. But not only that, I found a lot of the SMMEs are focusing just on that one contract cause that’s all they have capacity for at that time. We say we here with you now.  Go out and win 2, 3, 4 contracts and we will make sure that you can go and get all of those together. And that’s also how our pricing works. We’ve also made sure that the way we price reflects that partnership model. So instead of charging you a traditional interest linked to prime, we just heard about how obviously the interest rates going up. So, there’s nothing linked to prime. You get a term sheet based on a profit percentage and also it’s the alignment of interest. If we are able to save money for you on your supply chain, we’ll both benefit and you’ll receive more in your proportion. So, I think we make sure that there’s a full alignment and all of our incentives are in the same.

Noluthando Mthonti-Mlambo (POWER 98.7 POWER BUSINESS Host)

Nice. Is there a best time for an SMME to approach you? Of course, you know a contract I assume might be, but maybe a minimum. But you know, when would be the right time?

Joshua Kadish (Chief Operating Officer and Director at Sourcefin)

For sure so. What we found is a lot of the clients unfortunately come to us after winning a contract approaching the traditional banks and we almost sometimes become, you know, like a place of last resort. Once the clients are aware of what we do and they’re partnered with us, they don’t go anywhere else. Our retention rate is exceptionally high and so for us, if you have an order or you know you’ve got a book of clients and you know that you’re struggling to meet all the needs because of capacity either from professional or financial, whatever it is, come and have a chat with us set up a meeting, even if you don’t have the contract right now, but it’s something you’re looking at. Let’s see. There’re some people that just want to tap into our supplier network and let us help them on that side. That’s also perfect. So, there’s no right or wrong time. Obviously, hopefully you’re not already late on delivering, but even if you are, don’t worry, got a strong team of lawyers that can help you get some extension. And I think the truth is we super agile, and we just want to be you know we want to look for problem solving methods to make sure that the SMME has those solutions.

Noluthando Mthonti-Mlambo (POWER 98.7 POWER BUSINESS Host)

I’m wondering from your perspective, Joshua, a few weeks ago spoke to I think it was a C-suite executive actually in one of our segments and one of the things he said was you know what, what entrepreneurs need more than money is information and it’s not like you said, it’s not knowing where to go, but there’s also something that comes with the overwhelming nature of being an entrepreneur. And I’m wondering from your perspective if that’s exactly how it is, but most importantly, if you think that you know part of what we offer as a society, what we should offer entrepreneurs is mental health interventions. That might also assist them in how overwhelmed they may be.

Joshua Kadish (Chief Operating Officer and Director at Sourcefin)

Absolutely. I know what it’s like to be an entrepreneur. I joined the company as the second employee. Sure, today we’ve very quickly within two years scaled up to a large number and I know what it’s like to be an entrepreneur, it can be a lonely place. And I think Sourcefin is a home where you have people that are like minded and we can 100% assist on various different angles, but yes, I mean in short, I think you’ve hit the nail on the head. I think that there’s a lot of challenges that an entrepreneur would face day-to-day that I think a lot of us aren’t aware of. So, we know what it’s like. We’ve walked the same road. We’re not bankers, you know, we don’t come from the finance side, we actually come more from the supplier and logistics side. So, we know what it’s like and sort of we there to partner and make sure that this person receives the best possible service.

Noluthando Mthonti-Mlambo (POWER 98.7 POWER BUSINESS Host)

Well, Josh, I’d like to thank you for coming through today. And I think you’ve really given us a very interesting perspective of what can be done for SMMEs in an ecosystem that actually wants to make a difference. So, thank you so much for being with us today and that was a Joshua Kadish. The Director and Chief Operating Officer at Sourcefin. Speaking to us about the partnership with the local government. We make sure that we plug SMMEs into spaces that will really help them on their journey. We know that it’s not easy to be the backbone of the economy.

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