Survey Finds Government Late Payments Hurting SME Cash Flow

A survey completed by the South African Chamber of Commerce and Industry (Sacci) found that late government payments had severely impacted the cash flow of a small percentage of small businesses.

The number of businesses impacted was smaller than expected with 60% of small businesses regularly supplying goods or services to the government and 10% relying solely on business from the State.

Sacci CEO Neren Rau said that less than 10% of businesses surveyed had to permanently downscale its scope of operations and none had to reduce its employee base or shut down entire business operations. This being said however, he did point out that if there were any companies being liquidated or had closed, they would not have responded to the survey.

None of the survey respondents said that the government always paid on time but in fact a majority of 65% said that they majority of payments were made after the initial 30-day period and 5% said that the State never paid on time.

In response to these late payments, 35% of companies would hold services or goods back until the payment of the previous invoice was completed while 23% opted for an incentivised approach and offered discounts for early payments and penalties for late payments.

The results of the survey will be tabled at the Public Service Commission on Friday.

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