Getting paid on time is the number one financial challenge for half of South Africa’s small business owners, according to research by Xero.
However, a comparison has discovered that South Africa’s small businesses are still better off than their UK counterparts.
The study shows that South African small businesses spend 6% of their working day chasing payments, compared to 10% for UK businesses.
In South Africa, the average invoice is paid 10 days late in South Africa, and this is 14 days in the UK.
The worst-affected South African sector is healthcare, where small businesses spend 2,6 days a month chasing invoices. In the UK, the worst-off sector is human resources at 3 days a month.
In South Africa, small businesses hold late payments responsible for cash flow issues (32%) and reduced morale (18%), while in the UK the main effects are deemed to be a reduction in productivity (37%) and a loss of money (25%).
However, South African and UK businesses agree on the main culprits of late payments: that customers are also waiting for payments themselves, and a lack of consistency on payment terms.
Gary Turner, MD: EMEA at Xero comments: “It is encouraging that the late payments situation in South Africa is better than the UK, however it still far from ideal. Business owners can’t afford to rest on their laurels. With the right tools and education, we could wipe out late payments completely – and that’s what we should be aiming for.”