From PAYGO 1.0 to PAYGO 2.0

Off-grid industry associations are seeing investors shying away from PAYGO 1.0 companies because of the risks that inhere in this business model.

PAYGO 1.0: The operating model prioritizes revenue growth. Many SHS companies are operating according to this model. Many also fall short in protecting their customers, collecting payments, and achieving sustainable businesses.

PAYGO 2.0: The model takes a customer-centric approach. PAYGO 2.0 companies aim to ensure that instalments are affordable, consider customers’ financial stability, and monitor payments in detail. This model results in higher customer satisfaction, customer loyalty, better repayment behavior, fewer cashflow constraints and—as discussed below—more profitability.

PAYGO 2.0 promises a way forward for the industry. Companies that are optimizing their creditmanagement practices are better positioned to attract funding from investors that are tightening their duediligence procedures and prioritizing companies that manage their credit risk proactively.