Business Unity South Africa CEO Cas Coovadia has called on SMMEs to organise themselves into a coordinated body to ensure that the state complies with its 30-day payment promise. He said it was critical that this body pressured the state to pass appropriate regulations as small businesses were being destroyed by not being paid on time. Both the state and some in the private sector have committed to paying SMMEs within 30 days.
While the government made this promise years ago, 80% of national departments do not pay suppliers on time. Many big businesses adopted the 30-day payment practice during the early stages of the lockdown. Coovadia told Vutivi News that the most likely reason that departments were not reaching the target was because they did not have the appropriate systems and procedures in place to process payments.
“There is also no accountability,” he said. “SMMEs are very dependent on positive cash flows to survive. They often do not have sufficient working capital, so failure to pay them for services rendered in 30 days affects their cash flow and destroys confidence in working with (the government).” During a recent meeting held by Parliament’s Portfolio Committee on Small Business Development on the impact of the State of the Nation Address on SMMEs, it was revealed that of the 40 national departments, only eight achieved a 100% compliance rate for paying SMMEs on time.
They included the Small Business Development Department. It was further revealed that unpaid invoices for provincial departments amounted to R26.6 billion in the 2020/21 financial year, while at the national level it was R4.1 billion. Coovadia said that Busa was encouraging all businesses to pay SMMEs within 30 days.
“We launched a campaign last year to promote this, and the results have generally been good,” he said. “We believe corporate companies must pay SMMEs in 30 days. This will enable SMMEs to manage cashflow and to survive and grow, with the resulting positive impact on the economy,” he also said. The #PayIn30 initiative is spearheaded by Business for South Africa (B4SA) and is supported by a number of organisations including Busa, the Small Business Institute and the Black Business Council.