The team at Zetl wants to improve SMEs’ access to finance. Photo credit: Zetl Pte Ltd
Most would agree that owners of start-ups have it tough. Apart from having to navigate in uncharted territory, keeping the business afloat is of paramount concern.
One such person is Mr Shan Han, the Chief Executive Officer of private lender Zetl.
In fact, Mr Han, along with Zetl’s co-founders Mr Mark Francis and Mr Matthew Roberts – have all experienced how “underbanked the new generation of businesses in Asia-Pacific (APAC) are” back when they were working in finance, technology and staffing sectors.
Motivated by this common experience, the co-founders decided to venture into SME financing.
In 2018, they founded Zetl (pronounced “zet – tel”), so named “because the company helps clients ‘settle’ their bills!”, says Mr Han.
He recalls emptying his personal bank account to bridge long payment terms and ensure that he could pay his staff.
“This was an intensely difficult period personally and it baffled me that there were no alternatives.
“Unfortunately, this is a very common experience amongst entrepreneurs in APAC. My goal with Zetl is to ensure that entrepreneurs don’t have to go through the same experience that I did.”
He cites “access to finance” as a major challenge facing SMEs today.
Zetl specializes in invoice financing, but also offers its clients other solutions such as payroll financing and credit lines.
“New businesses have access to bank accounts and that’s about it. Getting loan products, credit cards, and working-capital facilities is virtually impossible.”
As a result, many entrepreneurs have to rely on their personal credit to finance their businesses, adds Mr Han.
“This problem is even worse for next-generation businesses (technology, professional services etc), which tend to be very ‘asset light’.”
There was a specific reason why Zetl chose to specialize in invoice financing.
“Unlike legacy businesses, next-generation businesses don’t have equipment, inventory, or property that they can collateralize. They also are often young companies without a multi-year operating history,” explains Mr Han.
“By taking the invoices we can help our customers leverage their clients’ credit quality to access financing.”
This also effectively allows them to keep business and personal risks separate.
Along the way, the co-founders expanded their offerings. For instance, when it first launched, the company only offered single invoice discounting.
But as the business grew, they noticed that Zetl’s repeat customers actually wanted financing for two things: To ensure they could meet their payroll needs every month; and unlock working capital to invest in their growth.
“So we expanded our product range to offer these products, which work to meet these use cases better than ad-hoc single invoice discounting.”
Everything is done digitally at Zetl. Customers can typically receive funding on the same day.
“Our goal is to simplify the whole process, so we’ve built things like Xero integrations, which allow customers to submit all their financials in one-click.”
The company makes personal guarantees optional, as it believes customers’ business credit, and that of its clients, is sufficient for them to “price the risk appropriately”.
In addition to credit facilities and payroll financing, it also offers full-turnover discounting.
This solution is popular with customers who have projects with large clients and worry about payment terms being too long to be able to effectively deliver the project, shares Mr Han.
In this model, Zetl provides its clients financing across the entire lifetime of the project and/or every invoice that is sent to the client.
“This allows our customers to have peace of mind that they can pay their staff or contractors every month – even if the project payments are staggered and/or delayed.”
Belinda loves thinking about random stuff, and collecting useless bits of facts and trivia. She often roots for the underdog, and believes the world needs more happy endings.
