The code is an initiative from the National Small Business Chamber (NSBC) which asks government and companies to commit to paying small and medium enterprises within 30 days of invoice.
Mike Anderson, NSBC founder and CEO, says the organisation sees SMEs going out of business every day, in many cases due to cash flow as a result of late or non-payment.
“Prompt payment is vital to the cash flow of every business, and especially to smaller businesses. The Prompt Payment Code is about encouraging and promoting best practice between government, larger organisations and their SME suppliers.”
Manage your cash flow
Jannie Rossouw, head of Sanlam Business Market, offers the following tips for SMEs to ensure they are in control of their cash flow:
- Negotiate payment terms before a deal is concluded: Once the terms are set it is very hard to change
- Stick to your guns: If a debtor has agreed to 30 day payment terms, hold them to it and begin chasing up the payment as soon as it is overdue
- Be fully in control of your debtor book information at all times: your systems of tracking monies owed and paid should be very tightly and actively managed so that you are firmly in the driving seat of this aspect of your cash flow
- Invoice on time and accurately: don’t make sloppy accounting work the reason your debtors don’t pay on time!