The SME Guide to Understanding Your Financial Health

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The latest guide in our Business High Five series, The SME Guide to Understanding your Financial Health, is an overview of how you can improve your business finance operations.


Download our complete guide to Understanding Your Financial Health


In this guide, your SME will be able to make use of insights on:


  • The Importance of understanding your financial health 
  • What does financial health look like for SMEs 
  • How is SME financial health measured 
  • Common mistakes to avoid for the best possible financial health
  • Services, Tools and Tech available to help



The Importance of understanding your financial health

All the decisions you’re making for your business impact your bottom line. It’s important to regularly review the financial status of your business to make sure you’re on the right track and to help with future decisions.

When a business is financially healthy it’s more likely to succeed. Every business needs internal financial controls to help ensure its money is properly managed. While outsourcing experts and using financial technology can be a good idea, it’s also best for you to know how to protect your bank account and your assets. 


What does financial health look like for SMEs

The “financial health” of an SME is open to interpretation, depending on the industry, the stage of the company’s journey or the challenges it has faced. But there are some proven metrics that business owners, leaders, investors and other stakeholders can use to objectively assess the health of any company. Implicit in the financial health concept is the question of whether a business has “healthy” income, cash flow statements and a sound balance sheet.


Related: 5 Reasons why access to funding is important 



How is financial health for SMEs measured


There is no standard set of metrics for determining an SMEs financial health, as most small businesses are privately held and are not required to release official financial results to the public. The good news though is that there are some well established methods to measure a smaller organisation’s health. Learn more about the most important indicators by downloading our latest guide


Try to avoid these common mistakes for the best possible financial health


  • Lack of cash reserves
  • Not having a cash flow forecast 
  • Not having a margin of safety between borrowing and debt servicing 

See more here.


Related: 4 Ways to improve your business’s cash flow 


Services, Tools and Tech available to help

As a business owner and entrepreneur, financial management may not be your area of expertise. This is why it’s advisable to consider using technology partners who can simplify, and often automate, specific tasks. It can also be worthwhile investigating local support service providers to outsource the more complex or labour intensive tasks to.


Download the full SME Guide here.


What can 60 days of cost-free* funding do for your business? 

To help SMEs get the funding they need to grow their business sooner, rather than later, we offer a 60 day delayed repayment option to all first-time customers. So if you apply for funding today, you won’t have to start repaying for 2 months.  If prompted enter promo code LULA when applying.


5 Reasons why access to business funding is important

5 Reasons why access to business funding is important

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Running a business is a long game that requires flexibility, adaptability and money. To keep it running in the right direction and meeting your growth trajectories is an ongoing commitment. Just as you’ve gathered the funds to get started or your profit is looking good, there comes occasions when extra funding is needed. It goes without saying that access to funding is vital for your business. Particularly funding that can keep up with needs intrinsic to your industry changes, challenges and requirements. Here are 5 reasons to keep in mind on why access to funding is important for your business.


1. Research and development
2. Fast access to funding helps secure cash flow
3. Good liquidity helps SMEs trade through turbulent time
4. Funds on tap allow businesses to respond quickly to growth opportunities
5. Unforeseen costs


Research and development

While not every business needs research and development in the earlystages, every business needs to stay relevant and innovative. Especially SMEs because they have to keep up with unexpected challenges and competitors with better resources. On the other hand many business owners still rely on thorough research to get ahead of the competition, often leading to having to finance the process. Ultimately, research and development is necessary for accelerating innovation and sustaining relevance, and it requires funding.

A few meaningful ways to start your R&D funding include approaching venture capitalists, seeking government assistance, alternative lenders such as Lulalend and using crowdfunding.

Fast access to funding helps secure cash flow 

The money that moves in and out of your business is important. Any sudden changes can impact your business negatively. Which is why positive cash flow is so important. If it dries up it’s difficult to recover and this inevitably affects all aspects of your business. Anything from seasonal slowdowns or recessions can strike at any time and it’s important to be prepared. With fast access to the right funding you’ll be able to keep a positive cash flow problems arise. Consider flexible options such as Lulalend’s revolving credit facility which is useful to business owners across all industries. This allows you to keep up with the kind of cash flow challenges that affect your business directly without applying for funding every time. 


Related: Understanding business credit assessments


Good liquidity helps SMEs trade through turbulent times

SMEs generally don’t have big cash reserves to fall back on, so when sales drop they need a safety net to meet day to day operating costs. Ideally a business should have anywhere from a month to six months of cash on hand in case of emergencies. Liquidity requires having accessible funds and together with cash flow, it’s crucial to the survival of small businesses. Keeping a close eye on liquidity allows business owners to make smart decisions about their finances and a healthy ratio helps creditors determine your creditworthiness to secure your business the credit it might need. SMEs need to track the financial health of their businesses and measuring liquidity helps to strike the right balance. 

You can look to financing companies to secure additional funding when the chips are down. This can afford you the flexibility to get through unprecedented cash flow crunches and buy you time to improve or rebuild your usual ebb and flow. 

Funds on tap allow businesses to respond quickly to growth opportunities

A new, recovering or growing business needs money to fund expansion strategies. When a business begins to grow, new locations, products, equipment, more marketing or employees might be required. Consider businesses in the construction industry for instance, where upfront investment may be required to fund projects. These activities add to the existing costs and may need additional funding. At this point profits may be slim and whatever the stage your business is in, outside financing might be an important driver of success to reach those new levels of growth and business development.


Related: 4 Ways to improve your business’s cashflow


Unforeseen costs

There’s no telling when an accident might jeopardise your hard earned work. From fires to floods, natural disasters and as recently experienced in South Africa, destructive protests and looting, or even staff injuries. You have to stay prepared. While insurance might cover most events, premiums still need to be paid and money for salaries still needs to be available during repairs. Even for less disastrous accidents such as malfunctioning machinery or outdated machinery, equipment breaking, just needing to be upgraded or systems being hacked, funding can come in really handy.

Funding allows businesses to plan ahead. In today’s rapidly evolving financial services industry, it’s good to know the options you can rely on. Importantly, it’s good to build good credit and relationships with alternative lenders like Lulalend that can offer you the flexibility you need to access funding easily and efficiently. 


The value of debt for business growth

The value of debt for business growth

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Regardless of the size of your company or how great your product may be, at some point, every business will need more finance than they have immediately available. When this happens, accessing additional funding will help to give your company the fuel it needs to grow. 



It may seem counterintuitive, but Trevor Gosling, Co-founder, and CEO of Lulalend – a financing partner to South Africa’s small- to medium-enterprises (SMEs) explains that fast access to capital plays an important part in any business growth strategy.

Gosling says that there is often a misconception that all debt is bad or that it is only used by struggling companies. “In fact, the opposite is often the reason why some of the world’s largest companies, including the likes of Apple and Coca-Cola, routinely seek capital infusions to keep profits within the company, maximize their tax savings, and assist with short-term financial obligations.”


Related: How to get a business loan?


When raising funds, selecting the right type of business financing plays a very important role in determining how a business accesses capital and long-term profits. “For business owners, debt can also help to improve the bottom line of a company because it makes expansion possible, can enable increased marketing efforts or the purchasing of new equipment and products,” he adds. 

Loans can also support seasonally driven companies that are often extremely profitable during peak season trading but need the extra cash to buy inventory and supplies during the quieter months. This is where debt can help to bridge the gap and balance out uneven cash flows throughout the year. 


Generally, the two most common ways in which businesses raise additional funding is through selling equity in the business or with debt financing. For many of South Africa’s burgeoning SMEs, what matters the most is the overall cost of business funding and the speed at which it can be acquired. While both financing options can help to give access to capital, using debt to support growth rather than equity is generally preferred. 


Related: How Refinancing Can Help Consolidate Your Business Debt


“While you will owe interest on debt, unlike equity, the funding that it provides doesn’t mean you will have to lose a stake in your business. Any profits that are made after paying debt and interest will be yours to keep. It’s also now possible to acquire a business loan in as little as 24 hours” Gosling explains. Additionally, if you choose to take on a partner to increase capital, it will also mean that you lose full control of your business and be asked to share profits made going forward – which for many fast-growing start-ups is not always the most attractive option. 


While loans are a great tool to finance inventory or equipment purchases, an increasingly popular debt instrument is a business line of credit or Credit Facility. Gosling says that a Credit Facility is one of the best ways to manage cash flow – especially if a business needs immediate access to funds to cover short-term expenses while waiting for customer payments.

If you manage your debt responsibly by making on-time payments this can help to improve your business’s creditworthiness. In turn, these smart credit habits can help to increase your overall funding limit, lower future costs, and help you to obtain better terms for your next loan.


Related: Practical cost-saving tips for your business


“The critical step that business owners need to consider before taking on any form of debt is to ensure that they have a plan on how to use any additional funding to generate a return and improve profits,” Gosling explains.
“If you don’t have a plan, or if you feel that your company is struggling financially, taking on debt for the wrong reasons can cripple your business,” he adds. 

To assist businesses to recover and grow during these difficult times, Lulalend is offering its first-time customers the opportunity to take out funding but only start repaying after 60 days, which gives them two months of cost-free capital.

As an accountant, how do you support your business customers’ working capital needs?

As an accountant, how do you support your business customers’ working capital needs?

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The owner of MS Catarino&Co, Sergio Catarino, has been a tax advisory accountant for over 18 years and recently faced this question. He was looking for a way to assist one of his clients with accessing working capital when he came across Lulalend’s affiliate program. 

The Lulalend affiliate program facilitates a quick and easy referral process for businesses and individuals who want to help their network of SMEs find a quick and flexible working capital solution. With Lulalend’s affiliate program, you can go the extra mile for your clients by helping them easily apply for working capital to take advantage of opportunities and help grow their businesses. When you help grow your client’s business, you could earn up to R60 000 in commission. 

Sergio takes a personal approach to his business clients’ needs: “We’re a small company that’s been in the business for over 18 years. Any new client is considered as family, where our approach is to dedicate regular time to them, other than just annually during tax season. We review their wills, company progress and ensure all their affairs are in order.” 

We go the extra mile for our clients when they are in need of assistance and try as much as we can to assist them –that’s why I referred my client to Lulalend.

My client runs a well-established business that’s been trading for almost 30 years. Due to the current climate, they were looking for a way to increase their cash flow. As an advisor for my client, I considered the needs of his business and looked at what will be best suited for his circumstances. We go the extra mile for our clients when they are in need of assistance and try as much as we can to assist them –that’s why I registered as a Lulalend Affiliate to refer my client to Lulalend.

“My client could see to his business needs from the funds he received and I earned my commission from Lulalend. That’s a win-win in my book.” 

As an advisor, I carefully looked at the figures and considered all the factors. I explained to my client that he could probably go to the traditional route, but at what cost? Traditional lenders want to secure everything; your house, your wife, your cat –but with Lulalend it’s different. He probably would have had to wait a few months for feedback, and that’s if he would have even gotten approval for business funding.

“It comes down to a trade-off. Does the client want money to be paid out fast, or do they want to wait?”

The bank will take its own time and still give the money on the provision that it’s secured lending. That’s the bottom line, and my client understood the requirements and repayments and was keen to proceed with his application for business funding from Lulalend.


Two fast and easy referral methods to choose from


All Sergio had to do was sign up to become a Lulalend affiliate by registering his details. He could then refer his client by either:

  1. Forward his client his unique referral URL that’s linked to his profile
  2. Or upload his client’s business information to his dashboard within five minutes  

Having access to his client’s information, Sergio decided to submit his client’s application and within five minutes the application was processed. Upon approval of his client’s business funding, Sergio received a 3% commission from Lulalend for helping his client grow his business. 

“My client could see to his business needs from the funds he received and I earned my commission from Lulalend. That’s a win-win in my book.”


“My client was impressed with Lulalend’s service and would choose them again in future,” says Sergio. “From the time he made the application, to the time that he was promised he would receive the funding. I am happy to say that we made the right decision.”


About Lulalend

Lulalend, South Africa’s first online provider of short-term business funding, provides a fast and transparent lending experience for SMMEs in South Africa. Their products, driven by AI technology, are specifically designed to make it easier for small businesses to access vital working capital. Their mission is to empower businesses and entrepreneurs across South Africa with the capital they need to grow. Learn more

Practical cost-saving tips for your business

Practical cost-saving tips for your business

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Reducing the cost of supplies, inventory, or business operations is common practice amongst many small business owners. Not preserving enough cash could land your business in deep waters, leaving you with a desperate call for a lifeline. Curbing your expenditure is a practical way to improve your cash flow and can be done without incurring risk to your business. Here are a few practical tips to help you achieve this.


Request a callback from our Funding Specialists


Take immediate action

Spending countless hours worrying about your business finances is time wasted and could be best spent strategizing realistic solutions. Create a well-documented plan to engage in a cost-reduction strategy. Map out any areas in your business that could do with an overhaul or cost reduction. Avoid waiting until the last minute to implement your plans. Start immediately. That way you may have a well-thought-out strategy in place for when the leaner months approach. 


Related: 5 Growth areas for your business in 2021


Think alternative energy sources

Going green is environmentally friendly, as well as a cost-saving initiative. Efficient energy solutions will help you save. According to the World Green Building Council, a green building on average saves about 25% in electricity usage. An environmentally friendly approach could seem like a less impactful method at first, but down the line, you will start to see a notable change in your finances. Create a clean carbon footprint for your SME by going digital. Print less, go paperless with online invoices or bookkeeping platforms, use energy-saving bulbs and water sparing methods on your taps. Encourage employees to actively conserve water and unplug devices when not in use. For the paper-heavy business, consider recycling. Partner with organisations such as WastePlan will ensure you get a rebate on every kilogram sent for recycling. Your business will be saving the environment, cutting costs, and making an extra buck along the way. 


Get paid faster 

The sooner your clients pay for your product or service, the sooner you have money in the bank. Historically, businesses have given clients 30 days to pay, however, the current trend is to afford clients two weeks or less to settle the payment. Give your clients clear notice on payment instructions, as well as the payment deadline in your service agreement to avoid any disputes. Lulapay allows you to offer your customers terms. You get paid immediately for any applications we approve. Never spend time collecting unpaid invoices again

Related: 8 Cost-Reduction Strategies to Improve Your SME’s Cashflow


Source the best quotes

You may have a long-term relationship with your supplier, and they may have been with you since day one, however, when it comes down to business, getting the best quote is what matters. If a long-term supplier is no longer offering the best deal, it’s time to look elsewhere. Comparing quotes might require extra time and effort, but in the long run, it may save you a couple of rands. Just be sure that while you’re sourcing the best quote, you’re not compromising on quality. 

It is important to foster valuable relationships with your suppliers. Building a solid relationship with suppliers will put you in a better position to negotiate with them – giving you a better likelihood of them offering you discounts and special deals. Trust is an integral part of the business. Long-term trust between business owners and suppliers can open opportunities for flexibility in extending your credit from a two-week payment to a four-week payment plan. Negotiation and the willingness to accommodate one another go a long way. 


Short term funding is an option

Consider short-term business funding to help your business if you are experiencing a dip in cash flow. Fast access to additional funding can provide a vital buffer during those leaner times. Look for flexible repayment plans that can help your business sustain a healthy cash flow. At Lulalend, we help SMEs get fast and easy access to business funding of up to R2 million, with no paperwork and no hidden fees. Short-term business funding ensures that you are paying the loan off quickly and not getting yourself into a debt cycle.


A quick guide to Bridging Finance

A quick guide to Bridging Finance

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What is Business bridging finance in South Africa?

Business bridging finance, or a bridge loan, is a short-term loan that is typically taken out for a period of 2 weeks up to 12 months. This type of funding enables sudden or unexpected cash flow gaps to be plugged, and can also allow businesses to invest in growth opportunities when business is slow.

Business bridging finance is ideal for when day-to-day operational costs such as materials or inventory purchases, salaries or rent need to be met in order to continue producing a product or a service.


How does business bridging finance work in South Africa?

Each different financial institution will offer its own version of bridging finance. The amount of funding you receive, and how long you will take to pay it back, will determine the exact nature of your funding offer and the costs associated with it.

Before you receive funding, the financial institution will often need proof that your business will be receiving sufficient income over the period of the loan. You can provide proof in the form of contracts, invoices sent out, or purchase orders.

Where most traditional financial institutions have restrictions on what you can spend your bridging finance on, alternative lenders, such as Lulalend, offer unrestricted bridging finance. This allows you to spend the funds on any expense associated with your business.


The Benefits of Business Bridging Finance

For many businesses, customers failing to pay on time are a common problem. This puts a business under severe financial strain and affects the ability to buy new inventory, or pay employees’ salaries, amongst a number of other challenges. Bridging finance allows your business to continue operating effectively without worrying about delayed cash inflows.

Here are some practical benefits of business bridging finance:

  1. Being short term in nature, funds can often be approved faster – especially via alternative lenders such as Lulalend
  2. Allows your business to continue production of goods or services even when cash flow is tight
  3. Aids business growth by allowing expansion plans that require significant investment to continue, as other day-to-day costs can still be met


Related: 3 Ways Bridging Finance Instantly Improves Cash Flow for Your Business


Who offers bridge loans?

Traditional banks, alternative financial institutions, and government funders all offer bridging loans.

Lulalend’s funding specialists advise customers to be wary of unscrupulous lenders in this space. It is important take out loans from reputable companies that only offer you loan amounts you are able to repay. As much as being approved for larger amounts, or being offered a loan even if you are blacklisted, may be tempting, often the repayment costs will harm your business in the long term.


Do banks offer bridging finance?

In South Africa, most banks provide bridging finance to business owners so they can cover cash flow shortfalls. However, it’s important to remember that traditional banks require collateral or restrict the use of the finance you’ve taken out. For example, they may state it must only be used to pay a specific supplier.


How much interest do you pay on bridging finance?

The interest associated with bridging finance will depend on the funder you choose, the total amount of your loan, and the period you take the loan for.

Lulalend will charge fixed monthly costs of 2% – 6% of the capital amount for bridging loans. The exact costs will vary from customer to customer. Unlike most lenders, Lulalend does not charge penalty fees on early repayments. This is something one should take close note of when going through a lender’s policy on repayments.


How long does it take to get a bridge loan?

Each lender has its own disbursement terms and how long it will take will depend on the amount of the loan and the type of loan you need.

At Lulalend, we disburse funds to successful applicants within 24 hours.


Related: Business Funding: An overview of how SMEs can access funding in SA


Are bridge loans a good idea?

Many SMEs admit that having inadequate cash flow is a problem that arises often. Bridging finance is a way to help ease the ups and downs of managing a business and its access to funds.

A bridge loan is a great solution for businesses that need access to funds quickly in order to take advantage of new business opportunities or to pay one-off or unexpected costs.


Why choose Lulalend?

Lulalend offers bridging finance that is unsecured, more affordable than traditional banks, and easily accessible within 24 hours. Plus, there are no penalty fees for early settlement.


Related: What is a business credit facility?


Lulalend and Business Bridging Finance

We understand that different businesses have different needs, which means their financing requirements will differ too.

Our business bridging finance offer is unsecured (no collateral required), affordable, and easily accessible. We also allow you to settle early without having to worry about penalty fees. With Lulalend’s quick and easy online application, you can access business funding of up to R2 million within 24 hours. Our application is completely paperless, requires no collateral, and you’ll have an answer in hours.

If you’re looking for funding for your business, read more about Lulalend’s business funding options here.