by Teboho Seretlo
All in the day of a small business owner in South Africa.
It’s been a minute and my creative writing juices dried up while I was chasing some business opportunities and non-paying clients out there. So, these past few weeks, I have been finalizing some projects, dealing with good news of funding applications I submitted on behalf of clients being successful and all sorts of other things. My spirits have been high after landing these successes and I was excited at the prospect of my bank balance swelling, if only a little bit.
I happily invoiced my clients, who were also excited at landing the funding after a long and exhausting process that lasted more than a year, in some cases. Lo & behold, the payments from clients did not come as quickly as I anticipated, in spite of my payment terms being clearly stated on the invoice. I am a small business owner, with shorter payment terms of 7 days from date of invoice. Why do I feel that I need to justify my terms to these clients when they need to pay? It has taken me a lump in the throat, sleepless nights, frustration, anger and disappointment that this has happened. But why have I been so slow in asking for my money? Is it fear of upsetting the clients? Why am I struggling to find my own voice when it comes to asking for what is rightfully mine? Not to mention that the prices I charge are lower than what others in the same field are charging. (Remind me next time to talk about this issue of pricing for your services).
What is even mind-boggling is, we know most of the time if one does work for public sector clients in SA, chances of delayed payments are a reality that we have learnt to live with. How painful that we have become so complicit (is this even the correct word to describe this?) and accepting of the situation. For instance, a friend of mine who owns a catering business is still owed money for work that she did last year, yet the institution keeps appointing her to do more work, which tells me that the quality of her service must be very good and to the client’s expectation, if not exceedingly so. For fear of losing out on future contracts, she obliges and keeps praying that one day, sanity will prevail and the outstanding invoices from last year will eventually be paid. She is not the only one. There have been several news headlines over the years about this challenge, such as this one https://www.sowetanlive.co.za/news/south-africa/2021-08-30-late-payments-to-small-black-business-worry-bbc/. The figures are mind boggling. A total of over 40,000 invoices worth over R4billion were not paid within the stipulated 30 days, thus stifling growth of these small businesses and sometimes leading to their demise.
We need to talk about this: late payments to small businesses can make life very difficult for us as we sometimes do not have access to bank overdrafts and credit cards that can be used to bankroll our businesses while we wait for the payments to come through. While you are sitting on an invoice you need to pay to your service provider, have you ever thought it could be the last straw on the camel’s back that can lead to their demise? Have you thought of the fact that, they in turn, have other suppliers they owe money to and because you have not paid them, they are unable to honour their financial obligations to their suppliers and this then causes a vicious cycle of non-payment in the small business (R0-R45million annual turnover businesses) eco-system?
How do we get better at this? I once read an article that in Kenya, the government has taken a strong stance against government departments that pay their suppliers late. I am hoping to hear what the experience of those who do business with the Kenyan government is like. Because sometimes, policies are good on paper but thin on implementation. Meantime don’t be shy to ask for your money from your clients, and do the right thing by paying your suppliers on time to. I am sure we can do better than this, surely.
Teboho Seretlo is the managing director and founder of Seretlo Investments (Pty) Ltd, a business support services consultancy which assists micro, small and medium enterprises with business intelligence support, business plans and investor pitch decks, funding applications, business cost optimization and business improvement processes. She also ran a franchised premium dry-cleaning outlet of her own for 5 years. She holds a BSc (Hons) in Maths from University of Fort Hare, Management Development Programme (MDP) from GIBS and an International Executive Development Programme (IEDP) GIBS & Rotterdam School of Management. She has over 25 years working experience with corporates such as Nedbank, Momentum, The Coca-Cola Company, SABreweries and Unilever, where she gained experience in a variety of disciplines including B-BBEE &transformation, financial management & budgeting, project management, decision-support, business strategy & analysis as well as research. She is passionate about gender issues and does volunteer work for women empowerment organisations.
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