The National Small Business Chamber (NSBC) is championing the importance of getting SMEs paid promptly – within 30 days or on agreed payment terms. We see SMEs going out of business every day, in many cases due to cash flow as a result of late or non-payment.
Prompt payment is vital to the cash flow of every business, and especially to smaller businesses. The Prompt Payment Code is about encouraging and promoting best practice between government, larger organisations and their SME suppliers. Signatories to the code commit to paying their SME suppliers within 30 days, and that there is a proper process for dealing with any issues that may arise. We all need to continue the drive to go big by supporting the small. Big business and government cannot sit on cash reserves when those all-important overdue invoices haven’t being paid.
-Late payments reach all-time high as SMEs wait too long to get paid
-Average amount owed to each SME at highest level
-Big business to blame for SMEs waiting for payment
-More than half of all SMEs burdened with late payments
-SMEs are going out of business due to late payments
Becoming a signatory to The Prompt Payment Code is open to larger organisations that make payments to SME suppliers. This includes private, public and not-for-profit companies, charities and government bodies.
When companies sign up to the Code, they are committing to:
- Pay SME suppliers within 30 days or on agreed payment terms once the final invoice is received
- Manage and resolve disputes as quickly as possible (seven days)
- Encourage their customers and suppliers to sign up to the code
If the majority of larger organisations adopt the code, like it has been internationally, then it’s a real “life saver” benefit. The result is that SMEs throughout South Africa will have improved cash flow, which is the most critical area of every business. For big business, it’s a statement about business ethics, and simply, it’s the right thing to do.
Once approved, organisations will use the “Proud Signatory of the Prompt Payment Code” logo on stationery, website etc. to show that they are serious about good payment practice.
We hope that the code will make a difference to you and your business. Wherever you go and whatever you do, watch out for the logo and follow the code signatories on The Prompt Payment Code