Covid-19 and the economic downturn have and will continue to have a “devastating” impact on the small and medium-sized enterprise (SME) sector throughout South Africa, National Small Business Chamber (NSBC) founder and CEO Mike Anderson laments.
In a statement on May 11, he again implored big business and government not to impose the “additional burden” on SMEs of nonpayment for 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 SME suppliers. Big business and government cannot sit on cash piles and destroy our SMEs. The nation also needs to know who is paying quickly and on time, and who is not,” Anderson elaborates.
He states that “more than ever before”, now is the time to ensure that all SME suppliers are paid quickly and on time.
As such, the NSBC is urging big business and government to #PayYourBills and release these all-important payments.
“For any business, the amount of money flowing in or out is critical to its success. When money is tight, paying basic bills can get challenging. But when cash is plentiful, a business can invest in its future by expanding, buying new equipment, hiring key staff or retaining key staff by rewarding them further.”
#PayYourBills is a national proactive movement closely associated with The Prompt Payment Code, powered by the NSBC, challenging the way SMEs are being paid.
“We see SMEs going out of business every day, in many cases due to cash flow as a result of late or nonpayment. What is pleasing to note is that leading brands are starting to openly commit to paying their SME suppliers within ten working days. This type of commitment needs to accelerate,” notes Anderson.
He adds that the findings of the recent Covid-19 National Small Business Survey “clearly indicate that late payments are at an all-time high as SMEs are waiting too long to get paid”.
The average amount owed to each SME is now at its highest level, with big business and government mainly to blame for SMEs waiting for payment. More than half of all SMEs in South Africa are burdened with late payments, and as a result SMEs are going out of business.
“Intentional late or nonpayment is totally unacceptable, as in most cases when an SME 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 SMEs, coupled with the current crisis and the economic downturn, spell out disaster for many SMEs, the mainstay of our economy, the very engine of our society and the future of job creation,” Anderson elaborates.
“We all have a collective responsibility to do whatever we can to keep SMEs in business and their workers employed. By paying SMEs quickly, this is the most meaningful step in the right direction,” he states.