Pay us on time! Small business’s plea to big business and government
06 May 2020 | Web Article Number: ME202019001
GETTING big businesses and government to pay their small business suppliers on time is one of the biggest challenges facing small businesses and when the problem persists too long, it can ultimately shut down a small business.
That’s according to Mike Anderson, Founder and CEO of the National Small Business Chamber (NSBC), who added, “More than ever before, now is the time to ensure that all your small business suppliers are paid quickly. We are urging big business South Africa and government to release these all-important payments now”.
He said that COVID-19 and the economic downturn had and would 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 how quickly we can pay our small business suppliers.”
Anderson said that 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.”
With this in mind, the chamber, through its Prompt Payment Code, 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 South Africa and government openly commit to paying small businesses on time.”
He said a recent COVID-19 National Small Business Survey had clearly indicated that late payments and the amounts owed are at an all-time high.
“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 tolate payments.”
Intentional late or non-payment is totally unacceptable, said Anderson, as in most cases 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.”
He said the Prompt Payment Code was 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.”