It goes without saying that Covid-19 has had a negative impact on South Africa’s economy. Due to the pandemic and the implemented Covid-19 lockdowns, many businesses found themselves indefinitely shutting down their business or filing for bankruptcies, others retrenching their employees and others opting for holiday payment terms offered by banks.
Recognising the denting economic impact that Covid-19 has had on small and medium businesses (SMEs) in South Africa, Business for SA (businessforsa.org) launched an initiative called #Payin30. Recognising that SMEs and entrepreneurs are vital to South Africa’s economic recovery strategy, the #Payin30 statement goes as follows,
“Corporate South Africa recognises that by paying their SME suppliers in 30 days, they can contribute to their survival and the preservation of jobs.”
The campaign’s key driving point is the recognition that access to working capital and cash flow is crucial for the growth and sustainability of SMEs. More so, this campaign understands that SMEs are key job creators in South Africa with a high unemployment rate.
As an SME itself, Relocation Africa fully supports this initiative, calling on corporate companies to join and sign up for the initiative. Relocation Africa is no stranger to the impact of Covid-19 on its business. As a business dependent on open borders and the mobility of corporate employees, the lockdown restrictions and closing of borders have had a negative impact on the economic viability of the business. Having been forced to make difficult decisions such as retrenching employees and enforcing payment cuts, it understands the need for their business to pay their supply chain in or less than 30 days and in turn for corporates to pay SMEs in 30 days.
Director of Relocation Africa, Rene Stegmann says, “Relocation Africa has consultants and a supply network that is mostly SME’s and private individuals, we have decided that for us to have a reliable supply chain we need to ensure that their cash flow is not a reason for them to go out of business”. She goes on to speak about the importance of understanding that most of Relocation Africa’s supply network are breadwinners and job creators themselves, and the #Payin30 initiative creates not only a more reliable supply chain but also an enthusiastic one that knows that they are valued and prioritised by the company.
Well within reason, the campaign has been supported by large companies such as Naspers, SASOL, ABSA, Investec to name a few. An SME such as Relocation Africa supporting and practising this initiative is a display of ethical leadership and the recognition of social responsibility within the workforce. But the hard-hitting question to Relocation Africa is: As an SME itself, does Relocation Africa fear that such a commitment [of the #Payin30] would compromise the economic viability of themselves, especially during this economic crisis brought on by Covid-19? Stegmann confidently states, “We have one big risk, that is if our clients choose to pay us in anything other than 30 days, we are effectively risking our cash-flow, but we are addressing this with our clients and those who choose to #payin30 will be accoladed through the #payin30 campaign. We have converted 75% of our clients to commit to contractually paying us in 30 days and we have a couple more clients to negotiate with.”
“We believe that by us, as an SME, taking a firm step on #pay30, this will have a ripple effect both down and up the supply chains. #Togetherwearebetter.”
Relocation Africa can pride itself on being a leader and approaching this initiative with a bottom-up approach. Understanding the implications of late payments and how it can affect the supply chain, in turn affecting their ability to provide a service they have seamlessly done for 28 years, much is at risk. Stegmann aptly states that the business understands they are not isolated in their existence and that every action has counteraction. Furthermore, as a Global Mobility provider of services to large multinational businesses, the business [Relocation Africa] upholds their business and reputation through ensuring their own SMEs and private individuals who rely on them can survive to deliver the services to them.
There is much to say about how initiatives like that of #Payin30 are exemplary in the action against the capitalistic, exploitative side of the business. Not only an act of ethical behaviour and leadership put an act of compassion for SMEs who are vital in the economic ecosystem. We can only hope that large companies and businesses follow suit and support the preservation of SMEs during these unprecedented times.
For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email firstname.lastname@example.org, or call us on +27 21 763 4240.