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 can end up being more expensive in the long run.
Previously, only businesses with the financial means opted for alternative power solutions. However, now all businesses require an alternative power source to continue operating. Larger businesses that cannot rely on plug-and-play inverters have higher power requirements that necessitate additional financing, according to Eli Michal, CEO of fintech lender Payabill.
Payabill was established to assist businesses that lack the funds to immediately purchase stock from wholesalers. The company settles the account with the supplier, allowing businesses to install or resell stock and repay Payabill over extended terms. This helps businesses smooth out their cash flow and ultimately increase their profits.
Michal states that the ongoing blackouts have created new demand for Payabill in two markets. The first is installers, retailers, and resellers who utilize Payabill’s trade finance solution with loans of up to R1 million. The second market is small and medium-sized enterprises (SMEs) who cannot afford to install alternative power systems and pay in cash.
Asset finance from Payabill bridges this gap by paying the installer on behalf of an SME, providing them with time to pay off the expense. Michal emphasizes that the size of a business’s turnover does not necessarily correlate with the size of the alternative power system required. For example, a business with a turnover of R15 million per year may only need a trolley inverter, while a business with a turnover of R3 million may require 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 simply purchase a lithium trolley inverter appropriate for stage 6 load shedding from a retailer. The cost ranges from R10,000 to R20,000 for 750-1500 watts.
However, Michal warns against using lead acid or gel batteries, which are cheaper but not suitable for stage 6 load shedding. Medium power needs typically include small office environments or small shops that require power for essentials like lights and laptops. These businesses require a 3kVA to 5kVA inverter with lithium batteries and automatic switchover, costing between R30,000 to R80,000. They can eventually upgrade to solar power, which offers tax benefits and electricity savings.
For businesses with larger power needs, Michal cautions against attempting to set up a power solution themselves. Trying to cut costs by using cheap equipment and unqualified installers often leads to messy and unsafe situations. Payabill can connect SMEs with competent installers and reliable suppliers to avoid these risks.
Financing alternative backup power may not immediately result in cost savings, but it reduces 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.