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Late payments to SMEs run into billions

The national scale of late payments could equate around R249.5 billion across SMEs in South Africa

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Xero, the global small business platform, has today released new research that reveals South Africa’s small to medium businesses (SMEs) are each owed R99,800 in late payments at any given time according to their business decision-makers. Given there are an estimated 2.5 million SMEs in South Africa, this means the national scale of late payments could equate to a staggering R249.5 billion*.

The new State of Late Payments report reveals that a staggering 91% of small businesses are currently owed money outside of their payment terms. On average, SMEs waste 89.5 working hours per year – the equivalent of two working weeks – chasing late payments.

Colin Timmis, General Country Manager, Xero South Africa and professional accountant said: “It’s not right, or fair that SMEs have to deal with late payments. They live or die by their cash flow – and if they’re not paid, they can’t survive. Just think what they could do with an extra R99,800, it could contribute towards a salary or pay for some new technology.”

The National Development Plan aims to create 11 million new jobs in South Africa by 2030, and  wants SMEs to generate 90% of these new roles. But this new research shows that if late payments aren’t tackled, growth may be stifled. More than a fifth (21%) of respondents that had invoices paid late said they struggled to pay their suppliers on time, and a similar amount (20%) said they struggled to pay their staff. Nearly half (47%) listed cash flow and late payments as one of the main threats to their long-term growth aspirations.

It’s not just the impact on financials and growth, late payments impact personal wellbeing too. Over a quarter of respondents (28%) had to borrow money from friends and family to keep their business afloat, over a third (34%) cited stress as an impact, and 20% have taken time off due to illness.

Getting paid on time would help entrepreneurs invest and grow their business. When asked what they would do with the late payments owed to them, a third would clear some debt (30%), increase headcount or raise salaries (38%) and invest in new business technology (29%). Such technology could be the key to tackling the late payment epidemic.

“It’s really positive to see that SMEs want to invest in new tech and growing their teams. But for this to happen, we need a collective effort to tackle this culture of late payments. There are some actions SMEs can take now to help reduce the burden; make sure you invoice early, use cloud accounting software to send automated payment reminders, and lean on your accounting partners for advice,” Timmis concluded.

Other key findings revealed:

  • 17% said that the month of May carried the highest number of outstanding invoices
  • Just over a fifth (21%) are struggling to pay for business-critical services
  • 21% were refused access to finance because of late payments
  • 19% are prevented/held back from investing in the business, innovating and growing

To find out more about how late payments are affecting SMEs along with tips on how to manage late payments, read the full report here.

*Calculated by multiplying the estimated number of SMEs in SA (2.5 million) by R99, 800 (the average amount in late payments owed to SMEs at any given time). This amounts to R249.5 billion.

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Second-hand smartphone market booms

The worldwide market for used smartphones is forecast to grow to 332.9 million units, with a market value of $67 billion, in 2023, according to IDC

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International Data Corporation (IDC) expects worldwide shipments of used smartphones, inclusive of both officially refurbished and used smartphones, to reach a total of 206.7 million units in 2019. This represents an increase of 17.6% over the 175.8 million units shipped in 2018. A new IDC forecast projects used smartphone shipments will reach 332.9 million units in 2023 with a compound annual growth rate (CAGR) of 13.6% from 2018 to 2023.

This growth can be attributed to an uptick in demand for used smartphones that offer considerable savings compared with new models. Moreover, OEMs have struggled to produce new models that strike a balance between desirable new features and a price that is seen as reasonable. Looking ahead, IDC expects the deployment of 5G networks and smartphones to impact the used market as smartphone owners begin to trade in their 4G smartphones for the promise of high-performing 5G devices.

Anthony Scarsella, research manager with IDC’s Worldwide Quarterly Mobile Phone Tracker, says: “In contrast to the recent declines in the new smartphone market, as well as the forecast for minimal growth in new shipments over the next few years, the used market for smartphones shows no signs of slowing down across all parts of the globe. Refurbished and used devices continue to provide cost-effective alternatives to both consumers and businesses that are looking to save money when purchasing a smartphone. Moreover, the ability for vendors to push more affordable refurbished devices in markets in which they normally would not have a presence is helping these players grow their brand as well as their ecosystem of apps, services, and accessories.”

Worldwide Used Smartphone Shipments (shipments in millions of units)

Region2018
Shipments
2018 Market
Share
2023
Shipments*
2023 Market
Share*
2018-2023
CAGR*
North America39.022.2%87.226.2%17.4%
Rest of World136.877.8%245.773.8%12.4%
Total175.8100.0%332.9100.0%13.6%

Source: IDC, Worldwide Used Smartphone Forecast, 2019–2023, Dec 2019.

Table Notes: Data is subject to change.
* Forecast projections.

Says Will Stofega, program director, Mobile Phones: “Although drivers such as regulatory compliance and environmental initiatives are still positively impacting the growth in the used market, the importance of cost-saving for new devices will continue to drive growth. Overall, we feel that the ability to use a previously owned device to fund the purchase of either a new or used device will play the most crucial role in the growth of the refurbished phone market. Trade-in combined with the increase in financing plans (EIP) will ultimately be the two main drivers of the refurbished phone market moving forward.”

According to IDC’s taxonomy, a refurbished smartphone is a device that has been used and disposed of at a collection point by its owner. Once the device has been examined and classified as suitable for refurbishment, it is sent off to a facility for reconditioning and is eventually sold via a secondary market channel. A refurbished smartphone is not a “hand me down” or gained as the result of a person-to-person sale or trade.

The IDC report, Worldwide Used Smartphone Forecast, 2019–2023 (Doc #US45726219), provides an overview and five-year forecast of the worldwide refurbished phone market and its expansion and growth by 2023. This study also provides a look at key players and the impact they will have on vendors, carriers, and consumers.

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Customers and ‘super apps’ will shape travel in 2020s

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Customers will take far more control of their travel experience in the 2020s, according to a 2020 Trends report released this week by Travelport, a leading technology company serving the global travel industry.

Through independent research with thousands of global travellers – including 500 in South Africa – hundreds of travel professionals and interviews with leaders of some of the world’s biggest travel brands, Travelport uncovered the major forces that will become the technology enablers of travel over the next decade. These include:

Customers in control

Several trends highlight the finding that customers are moving towards self-service options, with 61% of the travellers surveyed in South Africa preferring to hear about travel disruption via digital communications, such as push notifications on an app, mobile chatbots, or instant messaging apps, rather than speaking with a person on the phone. This is especially important when it comes to young travellers under 25, seen as the future business traveler, and managing their high expectations through technology.

Mobile takeover

With the threat of super app domination, online travel agencies must disrupt or risk being disrupted. Contextual messaging across the journey will help. Super app tech giants like WeChat give their users a one-stop shop to communicate, shop online, book travel, bank, find a date, get food delivery, and pay for anything within a single, unified smartphone app. Travel brands that want to deliver holistic mobile customer experiences need to think about how they engage travellers within these super apps as well as in their own mobile channels.

Retail accelerated

In the next year, research shows, we will see an accelerated rate of change in the way travel is retailed and purchased online. This includes wider and more complex multi-content reach, more enriched and comparable offerings, more focus on relevance than magnitude, and an increase in automation that enables customer self-service.

“How customers engage with their travel experience – for instance by interacting with digital ‘bots’ and expecting offers better personalised to their needs – is changing rapidly,” says Adrian Roodt, country manager for Southern Africa at Travelport. “We in the travel industry need to understand and keep pace with these forces to make sure we’re continuing to make the experience of buying and managing travel continually better, for everyone.”

Read the full 2020 Trends report here: 2020 Trends hub.

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