The Cape Chamber of Commerce and Industry has warned that late payment of bills by national and provincial government departments and big business is threatening small and medium enterprises, and the jobs of those they employ.
The Chamber said in a statement that a Small Business Institute survey ‘has found that some bigger businesses treat small ones “as a line of credit”, some paying in 130 days, not thirty. Nearly half of the late payments were being written off as bad debt.
‘Government is far worse. According to the Department of Small Business Development, in one month it found that 71 883 invoices worth R4.3bn and older than 30 days, were unpaid by government departments. Another survey found in one month that more than 23 000 invoices for a total of R2 billion were paid late by provincial government departments.’
Small businesses relied on a regular cash flow to pay wages, promote their products and services, and invest. If the flow stopped for more than 30 days, it could mean failure for the business, and more people becoming unemployed.
The Chamber said such delays delivered ‘a double blow to the economy because when times are tough and jobs scarce, it is small business that steps up to the plate, often able to grow employment while larger corporates shed jobs’.
President of the Chamber Geoff Jacobs said: ‘Paying bills on time should be a national duty for large corporates, government departments, provinces, municipalities or individuals.
‘The news may be dominated by non-payment of electricity bills by municipalities and state-owned entities like South African Airways and Eskom but it tends to ignore the serious knock-on effect of late payment on the small end of the private sector.
‘While bigger corporations can borrow to bridge a cash flow problem, small business operators cannot. For them late payments don’t merely hurt, they can kill. As others have noted, late payments are the assassins of small businesses.’
Jacobs added: ‘It’s time we realized that paying small business invoices on time stimulates the economy, [and] gives them stability and confidence to grow faster, have a better cash flow, and employ more people. In short, everyone will benefit.’