In an effort to ensure small and medium-sized enterprises (SMEs) in South Africa survive the economic crisis, more than 50 large companies have formally committed to paying their SME suppliers within 30 days.
The initiative, called #PayIn30, is spearheaded by Business for South Africa (B4SA), the South African SME Fund and Business Leadership South Africa (BLSA) and supported by, besides others, Business Unity South Africa (Busa), the Small Business Institute (SBI) and the Black Business Council (BBC).
The recession and pandemic have severely impacted the country's 2.5-million small, medium and micro enterprises, which support about 10.8-million jobs.
With a tightening economy, the benefits of the banks’ payment holidays coming to an end, and the winding down of the Temporary Employer/Employee Relief Scheme (TERS), this is expected to rise to 10% to 15% of small businesses going into business failure next year, with almost a million jobs lost and at risk.
Even before the crisis, one of the key pressure points for SMEs was access to working capital and cash flow.
This has a domino effect, as more than 20% of small businesses struggled to pay their staff and suppliers, and were denied access to finance because of poor cash flow.
Covid-19 has exacerbated this problem. Some companies have used the crisis to extend payment terms and have asked SME suppliers to reduce fees, which is noted as unsustainable for smaller businesses.
Corporate South Africa recognises that paying their SME suppliers within 30 days is one of the key levers for an SME’s sustainability, the initiative noted.
“#PayIn30 is aimed at institutionalising a culture of early payments of SMEs. Over 50 companies have committed to this campaign and we expect this number to increase in the months to come. I am proud that our members recognise that we’re all in this together, and as corporate leaders, we need to do our part to help our economy grow,” said BLSA CEO Busi Mavuso.
“We support unreservedly B4SA’s drive to ensure that corporates in South Africa pay SMEs within 30 days of receipt of invoice. Paying timeously is even more important in these difficult economic times when companies are struggling to maintain revenue.
"AngloGold Ashanti hopes that by being part of this nationwide campaign, we can help raise awareness about how something as straightforward as paying invoices within 30 days can have a positive impact on SMEs. It will enable them to keep cash flow coming, helping them to weather the current economic storm. These businesses are not only providing goods and services, as well as adding to tax revenue, they also provide work for millions of people across the country and are of great value to South Africa,” said AngloGold Ashanti interim CEO Christine Ramon.
“If there’s no money coming into an SME from its customers, there’s no money with which to pay their employees, lenders or their own suppliers. The knock-on effect of late payments reverberates across the economy. That’s why early payment terms for SMEs are critical. Aspen Pharmacare wholeheartedly supports B4SA’s #PayIn30 campaign and commits to paying all its SME suppliers within 30 days,” commented Aspen Pharmacare senior executive Stavros Nicoloau.
“At our South Deep mine on the West Rand we support almost 80 suppliers from surrounding communities. Most of them are SMEs heavily reliant on work from us. It is therefore critical that we pay them within days after they have completed their job,” noted Gold Fields CEO Nick Holland.
JSE CEO Leila Fourie said SMEs were key to the growth and development of the economy and play a fundamental, grassroots role in driving employment in our country. Many livelihoods are dependent on the success of these small businesses.
"It’s for this reason that we, as the JSE, have pledged our support for the B4SA campaign, #PayIn30, which calls on corporate South Africa to play its part by committing to pay SME suppliers within 30 days. This enables small businesses to pay their employees and suppliers, and keep the doors open. Let’s come together to keep this crucial segment of our economy thriving,” she added.
“Sasol supports B4SA and the #PayIn30 campaign and is committed to enabling the sustainability of our small and medium businesses. In displaying this commitment, Sasol has committed to the prompt payment code of ensuring payment to our SMEs within 30 days. Since April, Sasol has paid 93% of its SME suppliers within 30 days and are working hard to improve on this performance,” commented Sasol president and CEO Fleetwood Grobler.
The Minerals Council South Africa has also added its voice to the calling for the payment of SME suppliers in 30 days. The Council has committed to doing so and has urged members to follow suit, and has noted that several of its members have already committed to this, and it expects more to do so in the future.