According to new research from leading cloud accounting software provider, Xero, getting paid on time is the number one financial challenge for as much as half of South Africa’s small business owners. Xero’s recently launched tool, the chasingpayments.co.za platform, offers a means and advice on how to improve cash flow and end problems associated with late payments.
Commenting on the results, Marnus Broodryk, CEO of The Beancounter and Shark Tank SA investor, said:
"The amount of time wasted chasing invoices is a scandal. Late payments are a big problem for many small businesses. The resulting issues with cash flow can stifle growth and even put entrepreneurs out of business. South Africa's small businesses are engines of economic growth, employing around 60% of the country's workforce and contributing up to 52% of GDP. Xero's research shows that more needs to be done to boost them if our economy is going to succeed."
The research revealed that small business owners spend 1.3 days per month chasing invoices, with the average invoice paid 10 days late. The worst affected sector is healthcare, where businesses spend 2.6 days a month chasing invoices, followed by manufacturing & utilities, and architecture, engineering & building, at 1.5 days each. Port Elizabeth businesses are the worst off (1.5 days), ahead of those based in Johannesburg (1.1 days).
- Accounting in the cloud - Xero's Gary Turner on conquering SA.
- Xero appoints Colin Timmis as SA head of accounting.
- Xero roadshow: SMEs are the lifeblood of the world's economy.
Gary Turner (pictured), MD EMEA at Xero, adds:
"South Africa's National Development Plan aims to create 11 million jobs by 2030. Supporting small businesses is key to achieving this but, as our research shows, this will be difficult with the specter of unpaid invoices and cash flow difficulties hanging over the country's entrepreneurs. The issue of late payments should be given more prominence, with more education needed on how business owners can improve cash flow."
The research also reveals that late payments have caused cash flow issues for 32% of respondents, while 18% blame them for reduced morale and 16% felt that late payments result in reduced productivity. The main factors believed to be responsible for late payments include the fact that customers are waiting for payments themselves (24%), customers are disorganised and cannot track their payables (23%) or that customers have set their own internal payment terms for paying invoices, regardless of supplier terms (23%).
