Large companies have decided to come to the party and help SMMEs to get out of their financial troubles as a result of the Covid-19 pandemic. More than 50 big businesses have pledged to pay their SMME suppliers in under 30 days.
The #PayIn30 initiative is spearheaded by Business for South Africa (B4SA), the SA SME Fund and Business Leadership South Africa (BLSA). It is supported by Business Unity South Africa, the Small Business Institute and the Black Business Council.
“#PayIn30 is aimed at institutionalising a culture of early payments,” said BLSA CEO and B4SA steerco member.
“Over 50 companies have committed to this campaign, and we expect this number to increase in the months to come.” The initiative already has support from companies such as AngloGold Ashanti, Aspen Pharmacare, BP, Clientèle, Discovery and Coronation Fund Managers.
According to data from Transunion, 6.4% of formal SMMEs are going bankrupt. A total of 260,000 jobs have already been lost and 240,000 are at risk. “Paying our SME suppliers early is a clear demonstration of a shared value approach to business,” said Adrian Gore, who is the Discovery Group CEO and chairperson of the SA SME Fund.
“As a society, we need to start implementing bold actions to grow our economy and preserve and create jobs. I believe entrepreneurs are a powerful force and an integral part of this rebuilding. We need to support them.” Allan Gray CEO Rob Formby has encouraged other CEOs to join the initiative.
“The SME sector employs about 47% of South Africa’s workforce and accounts for 20% of GDP and has the potential to play a critical role in our country’s economic recovery and future growth,” he said. “Cash flow is key – and these small businesses are heavily reliant on being paid for their services so that they, in turn, can pay their staff and replenish supplies.” And Aspen Pharmacare’s Stavros Nicoloau agreed that the knock-on effect of late payments was felt across the economy.
“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. That’s why early payment terms for SMEs are critical.”
The initiative has warned that as the economy limps along and bank payment holidays come to an end, this situation will not improve anytime soon. It is predicted that between 10-15% of SMMEs may fail next year, placing one million jobs at risk.
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