Winning A Tender Is Just The Beginning, Embrace Supply Chain Financing To Survive Long Payment Periods


Etched in the Kenyan constitution is the provision that 30% of government procurement contracts be reserved for youth, women and people living with a disability. This great opportunity has over time acquired a reputation as a sure way to riches, however, if you dig deeper and speak to people who have actually won tenders and successfully fulfilled supply contracts; you will hear of the battles they wage every day in the struggle to survive long cash starving payment periods. Supply chain financing is a great way to help you survive cash delays in your business.

What is Supply Chain Financing?

Supply chain financing is an arrangement to help commodity suppliers to get operating cash using their invoices or LPOs while at the same time allowing buyers to extend their payment periods. For instance, you have supplied 30 bags of maize to a school and according to the agreement you are to be paid after 3 months. However, since you have no cash to keep on buying and supplying the maize for 3 months without payment, you approach a financer for help, this can be a bank or any other financial institution offering the service. They then tell you that they can give you money to keep running the business only if you provide approved invoices from the school you’ve been supplying.The financier will then collect payment from your buyer when the terms mature.


The EABL Plant in Ruaraka. Image from Elsie Ndonga

How can I Increase my likelihood of getting financing?

A financial institution will determine whether to fund you or not by looking at the risk associated with the institution that has given you the supply contract – fundamentally, their credit rating will determine your access to finance. Hence, take precautions from the very beginning; ensure that before you bid for tenders from any institutions, you have checked their credit record, do they have any complaints filed against them at the Public Procurement Oversight Authority (PPOA)? What are other suppliers who’ve dealt with them saying about them? Don’t go in blind, you should be able to trust the organization that you are getting the supply contract from.

What do you need to look for when choosing a financier

When deciding who to approach for financing, consider their transaction charges interest, the percentage of the invoice or LPO that they will finance and determine whether you can provide the balance that will remain. Know the amount of time they provide for you to pay them back, and how fast it will take for you to get the cash (this is very sensitive especially if you have to get quick money to buy supplies).

Companies Providing Supply Chain Financing in Kenya

Private Companies

These are companies established with the sole reason of providing financing for suppliers – they are not banks, they provide both invoice financing (where you have already supplied goods but have not been paid) and LPO financing, ( where you have won a tender but don’t have the money to buy supplies and finance the tender). Examples of such companies include, Umati Capital and Biashara Factor formed in 2012 and 2009 respectively, they both finance up to 80 % of invoices and have a pre-approved list of buyers that they accept invoices from (Umati charges an extra 16,000 for buyers who are not on their list). The repayment period is 3 months for both of the companies on invoices financed.


You can also get supply chain financing products from traditional Banks, KCB finances up to 80 % of invoices between Ksh.100, 000-Ksh.2,000,000, charges 2.5 % interest per month for the 90 days payment period but requires you to have banked with them for a minimum of 6 months (a major difference between a financing from a private company and a bank). Stanbic Bank finances up to 90 % of the invoice value – which is a relatively high amount and differentiator for them, the payment period is 3 months. NIC bank finances 80% of the invoice but at a slightly higher value between Ksh.300,000 -3,000,000 with a maximum repayment period of 3 months.

Whether you choose a bank or a supply financing company, do not allow your business to die of a cash drought when there are multiple sources of finance to explore.

Here are more tips to help you finance your business – Tips To Help You Bootstrap Your Business And Cut Costs



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Gabriel is an entrepreneurship enthusiast, with a fondness for questioning the workings of everyday things. He is an entrepreneur, a lover of stories and a member of Rotaract. He is a freelance writer ( engage me at, skilled in crafting engaging content; from fintech to marketing techniques, startup culture, business development, analysis...the list goes on ..the only thing that keeps him up is the fact that anyone can change the world.