Getting big business in South Africa and government to pay their small business suppliers on time is one of the biggest challenges facing small businesses and when the problem persists for too long, it can ultimately shut down a small business, warns the National Small Business Chamber (NSBC).
“More than ever before, now is the time to ensure that all your small business suppliers are paid quickly. We are urging big business in South Africa and government to release these all important payments now,” NSBC founder and CEO Mike Anderson emphasises.
He indicates that Covid-19 and the economic downturn have and will continue to have a devastating impact on small businesses throughout South Africa.
“Small businesses need to pay their workers, their rent, suppliers and other key operating expenses, and survive as a family. What they don’t need right now, or at any time in fact, is that additional burden of not receiving payment on outstanding invoices. We have limited control over how long the pandemic will disrupt our nation, but we are in control of how quickly we can pay our small business suppliers,” he says.
Anderson highlights that for any business, the amount of money flowing in or out is critical to its success.
He indicates that through the Prompt Payment Code, an NSBC initiative, the organisation is challenging the way small businesses are being paid.
“We are championing the importance of big business and government paying small business suppliers within 30 days or much quicker. It’s a highly recognised process where business and government openly commit to paying small businesses on time.”
He cites the findings of a recent Covid-19 National Small Business Survey, which indicates that late payments are at an all-time high.
“The average amount owed to each small business is now at its highest level. Big business and government are mainly to blame for small businesses waiting for payment. More than half of all small businesses in South Africa are burdened with late payments. The result is that small businesses are going out of business due to late payments,” Anderson notes.
He emphasises that intentional late or nonpayment is “totally unacceptable”, noting that the majority of the time, when a small business goes out of business, a family goes out of business.
“Procurement policies urgently need to be changed to accommodate for early payments. Late payments to small businesses coupled with the current crisis and the economic downturn spells out disaster for many small businesses, the mainstay of our economy, the very engine of our society and the future of job creation.
"We see small businesses going out of business every day, in many cases due to cash flow as a result of late or non-payment. Prompt payment is vital to the cash flow of every business, and especially to smaller businesses. The Prompt Payment Code is about encouraging and promoting best practice between government, larger organisations and their small business suppliers.
“We all have a collective responsibility to do whatever we can to keep small businesses in business and their workers employed. By paying small businesses quickly, this is the most meaningful step in the right direction,” says Anderson.