South Africa‘s travel industry is showing signs of recovery, with international arrivals climbing 12.3% during the first half of 2026, per the Department of Tourism. The sector’s economic output has rebounded as well, with tourism sustaining 953,981 jobs in 2024 and adding R361.7 billion to the national GDP.
While the industry is expanding, this success has not solved liquidity issues for all players. Securing a deal does not guarantee that a small or medium enterprise has the cash on hand to fulfill it. For numerous tourism SMEs, the lag time between receiving an award and actually getting paid acts as a significant hurdle to expansion.
Tourism Contract Financing Challenges
Working capital requirements often precede revenue generation for these businesses. For instance, a transport firm might need to buy vehicles and fuel before it earns a cent, while an event supplier must pay upfront deposits for venues and equipment. The financial shortfall can persist from the moment a deal is signed through mobilization, service delivery, invoicing, administrative approval, and final payment.
Andrew Maren, the founder and CEO of ProfitShare Partners, observed that “Winning a contract does not necessarily solve an SME’s financing problem — it can actually create one.” A business may find itself needing to cover costs for staff, inventory, deposits, transport, lodging, gear, venue fees, and insurance before the work is finished and long before the client is obligated to pay.
Financing Tourism SMEs
ProfitShare Partners, an alternative finance provider based in South Africa, has directed roughly R50 million toward tourism-related SMEs, assisting them in completing contracts worth at least R80 million. The firm has processed over 10,000 inquiries, supported more than 500 businesses, and deployed nearly R2 billion in capital.
The typical funding duration for these tourism transactions is about 60 days, yet an SME’s actual cash cycle often stretches beyond the contractual payment terms. A buyer who offers 30-day terms might only begin the clock after the service is done, the invoice is submitted, and the paperwork is approved.
Two specific cases highlight this misalignment. One scenario involved a tourism SME landing a contract valued at roughly R25 million and needing R5 million in working capital to proceed. In another instance, a shuttle operator held a deal worth approximately R350,000 but required around R250,000 in financing.
Traditional banks tend to rely heavily on a company’s financial history, existing cash flow, balance sheet, and collateral. Since a new contract might not yet appear on financial statements, SMEs often struggle to obtain standard loans.
Alternative Finance Models
ProfitShare Partners employs a model that evaluates the economics of a specific transaction, alongside the client’s financial health and ability to deliver. The company’s rates fluctuate based on the product, funding source, risk profile, transaction size, and the expected duration of the loan.
A project with healthy margins and a 45-day term can usually absorb the financing fees, whereas a low-margin deal that goes unpaid for four or five months can result in zero profit for the supplier. Risks also include disputes over invoices, missing documentation, or failure to meet delivery standards, all of which can disrupt cash flow.
Maren noted that “a good debtor does not eliminate timing risk. Even very large corporates and government entities can pay later than anticipated.” If a dispute arises or payment is delayed for an extended period, external funding may be put on hold while the financier and the SME investigate whether the issue is administrative, contractual, or related to the work itself.
Late Payments Remain Issue
Although government departments are expected to settle valid invoices within 30 days, lateness remains a major issue. National Treasury’s report for the 2024/25 financial year showed 464,188 invoices, totaling R43.6 billion, were paid late by national and provincial departments.
Private sector clients are no better, with many large corporations demanding payment terms of 60, 90, or even 180 days. Consequently, the true measure of pressure for an SME is the total time between spending money on delivery and actually receiving cash.
Reducing the Need for External Finance
It is worth noting that growth can actually increase funding requirements; ProfitShare Partners reported a repeat-funding rate of about 40% among its tourism clients. Frequent use of working-capital finance does not necessarily signify that a business is struggling to become financially stable.
The company’s pricing model incorporates over 130 variables, including product type, funding source, risk, transaction size, and expected duration. This system reflects ongoing transaction monitoring and risk-mitigation efforts, ensuring the cost of capital is weighed against expected profits and realistic collection times.
