Sometimes all it takes for a small, up-and-coming business to fold is to not be paid for its services for just one month.
It naturally has an impact on whether or not these businesses are able to pay their staff, suppliers and, in some instances, rental on properties or equipment. The ripple effects are devastating.
While the same could be said of any business, including the medium-sized ones, the effects may not always be felt immediately. Most have cash reserves and are better placed to convince a reputable financial institution to extend credit and negotiate fair interest rates.
The sad reality for emerging businesses, as Emibizeni General Services owner Luyanda Lawu told this newspaper, is that some SMMEs resort to taking out loans to pay salaries.
This cripples their businesses because by the time the government eventually pays up, they have to spend some of their profits on paying back interest on loans.
No business can grow under such circumstances. The news that the government will roll out a public-sector invoice tracking system application to monitor and fast-track payments to small businesses must be welcomed. It is long overdue.
While the political leaders have, for years, been calling for SMMEs to be paid within 30 days, this is the first tangible step from the government to make sure it gets done and that there is a mechanism in place to ensure accountability.
Finance MEC Oscar Mabuyane said it could no longer sit back and watch as SMMEs shut down projects in the province because they had not been paid on time.
He summed up the crisis of not paying SMMEs on time perfectly when he said: “There are still SMMEs that have outstanding payments for more than 90 days, resulting in retrenchments and closure of business.
“When you don’t pay SMMEs you are killing business because they can’t pay salaries for up to 90 days,” Mabuyane said.
The government must move speedily to ensure that this application is up and running soon – that it does not become another promise that takes years to come to fruition.
EDITORIAL | Walk the talk on SMME payment plan
Image: Michael Kimberley
Sometimes all it takes for a small, up-and-coming business to fold is to not be paid for its services for just one month.
It naturally has an impact on whether or not these businesses are able to pay their staff, suppliers and, in some instances, rental on properties or equipment. The ripple effects are devastating.
While the same could be said of any business, including the medium-sized ones, the effects may not always be felt immediately. Most have cash reserves and are better placed to convince a reputable financial institution to extend credit and negotiate fair interest rates.
The sad reality for emerging businesses, as Emibizeni General Services owner Luyanda Lawu told this newspaper, is that some SMMEs resort to taking out loans to pay salaries.
This cripples their businesses because by the time the government eventually pays up, they have to spend some of their profits on paying back interest on loans.
No business can grow under such circumstances. The news that the government will roll out a public-sector invoice tracking system application to monitor and fast-track payments to small businesses must be welcomed. It is long overdue.
While the political leaders have, for years, been calling for SMMEs to be paid within 30 days, this is the first tangible step from the government to make sure it gets done and that there is a mechanism in place to ensure accountability.
Finance MEC Oscar Mabuyane said it could no longer sit back and watch as SMMEs shut down projects in the province because they had not been paid on time.
He summed up the crisis of not paying SMMEs on time perfectly when he said: “There are still SMMEs that have outstanding payments for more than 90 days, resulting in retrenchments and closure of business.
“When you don’t pay SMMEs you are killing business because they can’t pay salaries for up to 90 days,” Mabuyane said.
The government must move speedily to ensure that this application is up and running soon – that it does not become another promise that takes years to come to fruition.
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