LETTER: Open up SME payments

Your editorial (Lip service paid to SME sector, July 30) refers. I commend the Small Business Institute (SBI) for its initiative in commissioning a baseline study of SA’s SME sector. It is long overdue and should have been a top priority for the newly created Department of Small Business Development in 2014.

As with the recent FinFind Access to Finance survey, SBI reported that late payment of invoices and terms longer than 30 days are a small business killer. Government is a notoriously bad payer, mainly due to inefficiency and incompetence, but big business is not innocent either.

Business sits on an estimated R350bn in payables. If just the overdue portion of that was injected into the economy, it would have an enormous effect on the cash flow of small business owners, who would be able to invest, grow their businesses and create jobs.

The CEO Initiative makes much of its R1.6bn SA SME Fund, but the potential positive outcomes of this pale into insignificance when compared to the negative consequences of delayed payments to suppliers. The 2017 Sage survey of late payments reported that small businesses write off more than 8% of their invoices by value due to nonpayment. This can make the difference between profit and loss.

I urge newly appointed Business Unity SA chairman Sipho Pityana and the chairman of Business Leadership SA and the CEO Initiative, Jabu Mabuza, to take the bull by the horns and finally address this matter. It would be the biggest single act they could take in easing the burdens small business owners face today.