The South African small business sector is going through one of the toughest decades in living memory and many SMEs are battling with cashflow and getting paid by customers. This has a knock-on effect when it comes to paying staff, suppliers and the South African Revenue Services – which creates further headaches.

According to data gathered by accounting technology firm Xero:

• 91% of businesses are owed money outside of their terms of payment
• 47% of businesses see cash flow and late payments as a threat to their business
• 30% would clear business or personal debt if they were paid on time
• 21% of SMEs were denied access to finance as a result of late payments

There is a very real human cost to chasing late payments with 34% indicating aggravated levels of stress, 29% indicating impact on social life and 29% reporting negative impact on personal and family life.

1. Businesses spend an average of 89.5 hours each year chasing late payments
2. The average overdue invoice in South Africa is 18 days overdue
3. R93 025 is the average overdue amount owed to a business with 10 – 49 employees at any given time – that amount rises to R113 902 for those with 50 – 100 employees
4. The month of May carries the highest number of outstanding invoices 

So are there any strategies that SA entrepreneurs can apply to ensure that they can reduce their late payment risk? 

1. Ask for a deposit up-front on work to be carried out with clear payment milestones 
2. Make sure you issue invoices timeously and follow them up when payment is due – many entrepreneurs are their own worst enemies in this regard 
3. Replace “Late” with “Early” – offer settlement discounts that will encourage clients to settle early - just make sure you are not compromising your margins 
4. Consider credit checks, references or research on your clients – too often entrepreneurs get so excited about winning “the big deal” that they forget to do some due diligence. We recently had a client who had supposedly won an international distribution opportunity with a multinational retailer and they were being asked to make an international shipment. A quick Google and LinkedIn search from our side, raised some questions about whether this was a real business. Too often we are shy / nervous to ask for credit references – for deals that might have a material impact on your cashflow, put your insecurities aside and get references. 

Use technology to help you: Get a Bridgement Dashboard

One of the real innovators in the South African marketplace is Bridgement, a local fintech operator.

Bridgement allows businesses who have a minimum of 6 month trading history and R500k in annual revenue to create a free-to-configure dashboard which will allow them access to facilities of between R10 000 and R5m that can be accessed inside of 48 hours.

It’s an ideal tool for high-growth businesses who have invoicing but are finding themselves consistently held back by late or slow payments. Bridgement will integrate with your accounting package (Xero, Sage etc.) and will be able to make real-time decisions on the size of the facility available to you. It's critical that you keep your financials up-to-date so that they can make real-time decisions to help your business. 

About the author:

Marc Ashton spent over 15 years of his life as a financial journalist where he worked for Fin24.com, was editor of Finweek magazine and ran JSE-listed media group Moneyweb. In 2018 he established Decusatio - a consultancy assisting entrepreneurs tackle the twin challenges of: 

- Access to Finance 

- Access to Markets

You can get in contact with him via This email address is being protected from spambots. You need JavaScript enabled to view it. or visit www.decusatio.co.za