Inside Your Business: Effect of late payments for SMEs and how to deal with it.

According to the quarter 3: 2021 Business Partners Ltd SME Index, the biggest challenge that South African small businesses project they will face in the next six months is around cashflow. For a small and medium-sized enterprise (SME), so much rests on being able to strike the delicate balance between money coming in and money going out. As such, late payment processing can catalyse a ripple effect that can have serious consequences for an SME. Both the public and private sectors need to re-evaluate their payment processes for small businesses and understand that the standard 30-day lead time on payments must be upheld and respected and where possible, shortened further.

This is the opinion of Gugu Mjadu, Executive General Manager: Marketing at Business Partners Limited, who works closely with many South African small businesses. “From experience, we know that above all the unique challenges that South African SMEs face, cashflow is the most significant. Whether a payment is processed within 30 days or not, can make the difference between whether an employee is paid on time and ultimately whether a business survives or folds. We urge corporates and state institutions to come to an appreciation of the seriousness of this issue and to re-examine their policies, action and support the swift payment of SMEs,” Mjadu asserts.