New analysis from small business (SMB) accounting platform Xero is calling attention to the late B2B payments epidemic in South Africa.
Gadget reported on Thursday (Dec. 5) that late payments to SMBs in South Africa have reached more than $17 billion. On average, each business is owed more than $6,800 in past-due payments. The figures, outlined in Xero’s latest State of Late Payments report, highlight the cash-flow challenges that South Africa’s estimated 2.5 million SMBs are facing.
“It’s not right, or fair, that [SMBs] have to deal with late payments,” said Xero’s General Country Manager for South Africa Colin Timmis in a statement. “They live or die by their cash flow — and if they’re not paid, they can’t survive. Just think what they could do with an extra R99,800 [about $6,800 USD]. It could contribute [toward] a salary, or pay for some new technology.”
Xero also calculated that small businesses waste an average of 89.5 working hours every year chasing down late payments.
Reports pointed to South Africa’s National Development Plan, which aims to have SMBs generate 90 percent of its goal of 11 million new jobs in the country by 2030. Yet, more than one-fifth of small businesses surveyed by Xero said they have had an invoice paid late and, as a result, struggled to pay their own suppliers on time. Twenty percent said late payments have led to challenges in paying staff, while nearly half agreed that late payments and cash flow are top threats to their growth plans.
“It’s really positive to see that [SMBs] want to invest in new tech and growing their teams,” Timmis continued. “But for this to happen, we need a collective effort to tackle this culture of late payments. There are some actions [SMBs] can take now to help reduce the burden: Make sure you invoice early, use cloud accounting software to send automated payment reminders and lean on your accounting partners for advice.”