Small businesses have been cautioned against taking cheap shortcuts for power as load shedding continues to escalate. These shortcuts may initially seem cost-effective, but they can end up being more expensive in the long run.
Previously, only businesses with the financial means opted for alternative power sources. However, the current situation has made it necessary for all businesses to seek alternative solutions to keep operating. Additionally, larger businesses that require more power than a plug-and-play inverter can provide face the challenge of securing additional financing for their power requirements, according to Eli Michal, CEO of fintech lender Payabill.
Payabill was established to assist businesses that lack the funds to purchase stock from wholesalers immediately. The company settles the account with the supplier on behalf of the business, allowing them to install or resell the stock and repay Payabill over an extended period. This helps businesses smooth out their cash flow and ultimately increase their profits.
Michal explains that the ongoing blackouts have created new demand for Payabill in two markets: installers, retailers, and resellers who utilize Payabill’s trade finance solution with loans of up to R1 million, and small and medium-sized enterprises (SMEs) that cannot afford to install alternative power systems and pay cash upfront.
Asset finance from Payabill fills this gap by paying the installer on behalf of an SME, giving them time to pay off the expense. Michal emphasizes that the size of a business’s turnover does not necessarily determine the size of the alternative power system needed. For example, a business with a turnover of R15 million per year may only require a trolley inverter, while a business with a turnover of R3 million may need a larger setup due to its power requirements.
For those with low power needs, such as a home office, professional installers may not be necessary. They can opt for a lithium trolley inverter appropriate for stage 6 load shedding, which can be purchased from a retailer for around R10,000 to R20,000. However, Michal advises against using lead acid or gel batteries, as they are cheaper but not suitable for stage 6 load shedding.
Businesses with medium power needs, such as small offices or shops, require a 3kVA to 5kVA inverter with lithium batteries and automatic switchover. This setup costs between R30,000 to R80,000 and provides seven to eight hours of uninterrupted work. These businesses can eventually upgrade to solar power, which offers tax benefits and electricity savings.
Michal highlights the challenges faced by businesses with larger power needs. They require between 5kVA to 12kVA and may attempt to set up a power solution themselves to cut costs. However, this approach can lead to complications and risks, such as using cheap equipment and unqualified installers. Payabill does not fund such approaches and instead connects SMEs with competent installers and reliable suppliers.
While financing alternative backup power may not immediately result in cost savings, it helps reduce load shedding anxiety and enables staff to perform optimally. Michal suggests that businesses that purchase the right inverter can eventually upgrade to solar panels, which provide more power and offer long-term savings and tax benefits. Since most businesses operate during the day, they can maximize the benefits of solar panels when the sun is shining.
Overall, Payabill aims to support SMEs in navigating the challenges of load shedding by providing financing options and connecting them with trusted power solution providers.