Connect with us

Featured

Late payments to SMEs run into billions

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

Published

on

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.

Featured

SA’s Internet goes down again

South Africa is about to experience a small repeat of the lower speeds and loss of Internet connectivity suffered in January, thanks to a new undersea cable break, writes BRYAN TURNER

Published

on

Internet service provider Afrihost has notified customers that there are major outages across all South African Internet Service Providers (ISPs), as a result of a break in the WACS undersea cable between Portugal and England 

The cause of the cable break along the cable is unclear. it marks the second major breakage event along the West African Internet sea cables this year, and comes at the worst possible time: as South Africans grow heavily dependent on their Internet connections during the COVID-19 lockdown. 

As a result of the break, the use of international websites and services, which include VPNs (virtual private networks), may result in latency – decreased speeds and response times.  

WACS runs from Yzerfontein in the Western Cape, up the West Coast of Africa, and terminates in the United Kingdom. It makes a stop in Portugal before it reaches the UK, and the breakage is reportedly somewhere between these two countries. 

The cable is owned in portions by several companies, and the portion where the breakage has occurred belongs to Tata Communications. 

The alternate routes are:  

  • SAT3, which runs from Melkbosstrand also in the Western Cape, up the West Coast and terminates in Portugal and Spain. This cable runs nearly parallel to WACS and has less Internet capacity than WACS. 
  • ACE (Africa Coast to Europe), which also runs up the West Coast.  
  • The SEACOM cable runs from South Africa, up the East Coast of Africa, terminating in both London and Dubai.  
  • The EASSy cable also runs from South Africa, up the East Coast, terminating in Sudan, from where it connects to other cables. 

The routes most ISPs in South Africa use are WACS and SAT3, due to cost reasons. 

The impact will not be as severe as in January, though. All international traffic is being redirected via alternative cable routes. This may be a viable method for connecting users to the Internet but might not be suitable for latency-sensitive applications like International video conferencing. 

Read more about the first Internet connectivity breakage which happened on the same cable, earlier this year. 

Continue Reading

Featured

SA cellphones to be tracked to fight coronavirus

Several countries are tracking cellphones to understand who may have been exposed to coronavirus-infected people. South Africa is about to follow suit, writes BRYAN TURNER

Published

on

From Israel to South Korea, governments and cell networks have been implementing measures to trace the cellphones of coronavirus-infected citizens, and who they’ve been around. The mechanisms countries have used have varied.  

In Iran, citizens were encouraged to download an app that claimed to diagnose COVID-19 with a series of yes or no questions. The app also tracked real-time location with a very high level of accuracy, provided by the GPS sensor. 

In Germany, all cellphones on Deutsche Telekom are being tracked through cell tower connections, providing a much coarser location, but a less invasive method of tracking. The data is being handled by the Robert Koch Institute, the German version of the US Centers for Disease Control and Prevention. 

In Taiwan, those quarantined at home are tracked via an “electronic fence”, which determines if users leave their homes.  

In South Africa, preparations have started to track cellphones based on cell tower connections. The choice of this method is understandable, as many South Africans may either feel an app is too intrusive to have installed, or may not have the data to install the app. This method also allows more cellphones, including basic feature phones, to be tracked. 

This means that users can be tracked on a fairly anonymised basis, because these locations can be accurate to about 2 square kilometers. Clearly, this method of tracking is not meant to monitor individual movements, but rather gain a sense of who’s been around which general area.  

This data could be used to find lockdown violators, if one considers that a phone connecting in Hillbrow for the first 11 days of lockdown, and then connecting in Morningside for the next 5, likely indicates a person has moved for an extended period of time. 

The distance between Hillbrow and Morningside is 17km. One would pass through several zones covered by different towers.

Communications minister Stella Ndabeni-Abrahams said that South African network providers have agreed to provide government with location data to help fight COVID-19. 

Details on how the data will be used, and what it will used to determine, are still unclear. 

Continue Reading

Trending

Copyright © 2020 World Wide Worx