How late or delayed payments kill small businesses in South Africa

South Africa is one of the growing economies in the Africa and the World, however there is a lot of challenges facing small businesses. Every small business is vulnerable and can be destroyed by a few distractions and payments are the biggest challenge.

The Government, Municipalities, Large corporations / private companies and certain customers hamper the growth of SMMEs in a few ways:

– Red tape process before payment is finally done after deliver
– BEE procedures, Tax process and other internal payment processes that delay payment
– 30 days payment intervals (which are sometimes stretched to 60 or 90 days)
– 90 to 180 days payment policies and approaches by Government and large state agencies
– Customers not seeing the importance of paying on time but giving multiple reasons or excuses which are technically not reasonable enough; leaving the business cash flow compromised
– Endless paper work and requirements before payment can be made, while service can or is already delivered

How delayed payments affect a businesses

– Employees and suppliers not getting paid on time, in return distracting business process
– Small businesses cannot buy new machinery or improve their service delivery
– Business overheads drown business and owner with debts, overdrafts and loans made to cover business overheads
– Small business owners end up selling belongings and funding business from their pocket if they have another pocket to survive on or business eventually dies
– Business cannot grow as it slowly falls into the “hand to mouth” situation which means there is no money saved or a cash flow plan that can actually work

In conclusion, small businesses require payments done immediately or within 7 days to avoid above challenges and to have a cash flow that can work. Small businesses provide a lot of large corporations, state agencies and Government with services on regular bases but the red tape, payment policies and procurement procedures hamper a lot of small promising and potential economy growing business. If this can be addresses in a wider platform, our South African economy can grow and BEE can actually mean something.

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Contributor: TDKubu



Kubumedia Magazine | South Africa | International News online magazine

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