Lack of legal backing hurting SMEs

THE absence of clear regulatory and legal frameworks for factoring has created significant obstacles for small and medium enterprises (SMEs) in Zimbabwe, it has been revealed.

Factoring is a type of finance in which a business sells its accounts receivable (invoices) to a third party to meet its short-term liquidity needs, a fundamental avenue SMEs can use to grow their businesses.

The third party then provides liquidity to the firm expecting the company to pay back using the money they would later receive through the account receivables.

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