Float, a start-up company with offices in Nigeria and San Francisco, is here to solve the problems that many African companies say they have with cash flow.
According to TechCrunch, 85% of African SMBs have zero access to financing, which creates issues in the supply chain. Jesse Ghansah and his co-founder Barima Effah founded Float — originally named Swipe — 18 months ago with the hopes of closing the gaps in the funding.
” Cash flow [is] the number one problem that [businesses] face,” said co-founder and CEO Jesse Ghansah to TechCrunch. “Because you’re waiting for your revenue to come in, they sometimes fall behind in meeting certain expense payments like payroll, inventory, utilities. That’s what really causes a lot of these cash flow issues, and because of that, businesses can’t grow.”
For Float, solving cash flow problems involves providing the users with credit when they need it, and working capital when possible. The founders say that this approach to extending credit and cash to SMBs has allowed them to brag about a loss rate of 0%.
In other words, no business has defaulted on the platform in its history.
But they also acknowledge that as they grow, they also may not be able to keep that perfect record. However, with proper risk assessment, they’ll be able to manage it as best as they can.
“The thing with lending is that with more customers, your credit model gets tested. The more customers you have, the more probability that you’re going to have default losses. But as long as you have, like a solid credit risk criteria and assessment, you must always try to keep it as small as possible. It’s almost impossible to have a 0% default rate when you begin to grow fast,” said Ghanasa.
Ultimately, Float is rethinking the way African businesses manage their financial operations, from managing cash and making payments to accessing credit.