How SME owners can survive late payments

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Small to medium sized enterprises (SMEs) cannot absorb the costs of slow-paying clients. While standard payment terms are between 30 and 60 days, some large corporates and government entities take longer than 120-days to pay suppliers. Extended payment terms, used as a strategy by big business to maximise capital, put immense pressure on their small business suppliers, who rely on a steady cash flow to maintain operations.

“By creating a line of free credit through their suppliers, big businesses are treating SMEs unfairly. It’s supply chain bullying at its worst,” says Daniel Goldberg, co-founder of Bridgement, a Fintech company offering digital invoice financing to small business suppliers.

Small business suppliers lack bargaining power when dealing with established businesses and government. Given their size, SMEs cannot afford to ruin these relationships – even when payment is pushed out by as many as four months. “Every late payment has a material impact on a small business. Salaries don’t get paid, raw materials can’t be purchased, and fewer new projects can be taken on,” says Goldberg.

SME owners can take steps to minimise the impact of late payments on their business. These include invoicing promptly, negotiating shorter payment terms with clients and longer terms with suppliers, and using invoice finance to unlock value tied up in unpaid invoices. “Small businesses should consider claiming interest and debt recovery costs if clients pay late,” says Goldberg.

Applying for bank business loans can be a timely process, often taking weeks to approve; this does not resolve immediate cash flow concerns for SMEs. Local Fintech companies, like Bridgement, speed up the loan application process for small businesses. By accessing financial data through accounting packages such as Xero, QuickBooks and Sage, applications can be approved within hours. “Using technology and data science, we offer SMEs a convenient and flexible way to deal with slow paying clients, helping them acquire near-instant financing when they need it,” says Goldberg.

Bridgement, a board member of South African SME Finance Association (SASFA), offers invoice financing to SMEs – advancing funds to businesses, based on the amounts due from their invoiced customers. Registered companies who have been trading for longer than six months can access credit facilities from R10 000 up to R5-million. SMEs can apply in under two minutes on their website –


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