Inner City Gazette

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Est 2009 Tel : 011 023-7588 / 011 402 - 1977 Inner-City Gazette

Fax: 086 609 8601

Issue 18 - 2019

Email : info@inner-city-gazette.co.za

@ICG_Sales

9 - 16 May 2019

Website : www.inner-city-gazette.com

072 824 3014

Inner City Gazette

Distributed free to households, churches, schools, clinics, government departments, police stations, libraries and businesses in Bellevue • Berea • Bertrams • Braamfontein • City and Suburban • City West • Crown Gardens • Doornfontein • Fairview • Fordsburg • Hillbrow • Jeppestown • Jules • Johannesburg Inner City • Kensington • Lorentzville • Malvern • Marshallstown • New Doornfontein • Newtown • North Doornfontein • Park Meadows • Rosettenville • Selby • Troyeville • Turffontein • Village Main and Yeoville

Late payments kill small businesses “Small businesses need predictable cash flow to gain traction, pay their employees, market their products and services, and invest in their businesses. One of the surest ways to disrupt it is to delay paying them for their services.

SBI director Bernard Swanepoel

Johannesburg - Late payments have been called the ‘assassin of small businesses’ and many big businesses are treating small businesses as a line of credit, according to executive director of the Small Business Institute (SBI) Bernard Swanepoel. The survey by the SBI suggests that as many as 40 percent of late payments were being written off as bad debt by small and medium enterprises (SMEs) and they received payments, on average 101 days after the 30-day target. According to the latest available report by the Department of Small Business Development, released in September 2017, a total of 71 883 invoices to the value of R4.3 billion were unpaid by government departments and were older than 30 days. Over 23 000 invoices were paid late by provincial government departments in

2016, totalling more than R2 billion. “SMEs should consider claiming interest and debt recovery costs if another business is late paying for goods or a service,” suggests Swanepoel. The Department of Trade and Industry reports that some 70% of SMEs fail within the first 2.5 years. A recent study from the Global Entrepreneurship Index suggests that only 15% of start-ups are successful. “Small businesses need predictable cash flow to gain traction, pay their employees, market their products and services, and invest in their businesses. One of the surest ways to disrupt it is to delay paying them for their services. We hear stories every day of SMEs having to close their doors because neither big business nor government pay invoices on time; and sometimes they do not get paid at all,” Swanepoel said.

The SBI recently sent a letter to each of the top 100 companies on the JSE, asking whether they are paying SMEs within 30 days from invoice. Of those that replied, only one in 10 said they make that information public and only 25% reported a specific policy to pay SME suppliers in 30 days or less. A handful said they pay SMEs within seven to 15 days. The SBI recommends that big business, government and state-owned enterprises apply the new government definitions of what constitutes small, very small and medium enterprises to pay businesses falling into the first two categories within seven days, and medium-sized enterprises, depending on the invoice amount, in 30 days or fewer. The SBI also urges government departments to simplify and standardise invoicing as part of this process. Fin24


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