Issuer Business Partners Limited
The latest payments data from National Treasury points to a worsening of the late payments crisis across national and provincial government departments, raising serious concerns about the sustainability of current payment terms for South African small and medium-sized enterprises (SMEs).
At the end of the second quarter of 2025, 95,399 invoices older than 30 days with a combined value of R12,4bn remained unpaid. This represents a 17% decline or an additional 13,663 unpaid invoices compared to the end of the first quarter, when 81,736 invoices were outstanding.
The value of unpaid invoices has also deteriorated. Treasury data shows the rand value of invoices older than 30 days rose from R11,7bn at the end of the first quarter to R12,4bn at the end of the second quarter. This represents a 6% decline in one quarter or R663m.
For small businesses, these figures are far more than administrative inefficiencies. “Late payments are not just a cash-flow inconvenience for SMEs, they are a direct threat to business continuity,” says Lawrence Ramotala, area manager at Business Partners Ltd. “Unlike large corporates, most small businesses do not have the balance sheet or reserves to tolerate long payment delays.”
This impact is particularly severe for sectors that operate on low margins and high volumes. Retail, manufacturing and service-based SMEs are often the first to feel the impact, as they rely on consistent cash flow to replenish stocks, fund production cycles and meet day-to-day expenses. “When payment cycles stretch beyond 30 days, it disrupts the entire operating rhythm of a small business,” says Ramotala. “That uncertainty makes planning almost impossible.”
Prolonged delays in payments, whether by government departments or the private sector, also impact the broader economy. When SMEs are not paid on time, they are often forced to delay paying their own suppliers, many of whom are also small businesses. This could trigger a chain reaction of late payments that spreads across value chains, further weakening an already fragile trade ecosystem.
Late SME payments also result in salary payments being delayed or intermittent. For employees, many of whom are the sole or primary earners in their households, this immediately disrupts their ability to meet essential monthly obligations such as rent, school fees, transportation, insurance and groceries. Missed or late paychecks can push families into a cycle of debt, causing emotional stress and destroying financial stability. Over time, this stress impacts productivity, morale, and retention, while placing additional strain on social support systems. What may start as a late bill can turn into real-world hardship for families, contributing to broader socio-economic vulnerability.
In addition to immediate cash-flow challenges, persistent late payments undermine the ability of SMEs to invest in growth. When sources of income are unpredictable businesses are less likely to expand operations, hire additional employees, invest in new equipment or increase inventory levels. Over time, this hinders job creation and limits the contribution small businesses can make to economic recovery and growth.
“South African SMEs are flexible, but there are limits to this flexibility,” says Ramotala. “When late payments become the norm rather than the exception, even well-run businesses are pushed into survival mode. This has long-term consequences for competition and employment.”
In this environment, access to reliable cash-flow management tools and appropriate financing options becomes critical. short term financing solutions Having consistent invoicing cycles can help SMEs bridge payment gaps, maintain operational stability and protect supplier relationships while waiting for settlement of outstanding invoices.
However, financing alone cannot solve the underlying problem. Consistent enforcement of existing payment rules and greater accountability for late paying departments and those in the private sector is essential to restore confidence among small business suppliers.
“As long as late payments continue on this scale, small businesses will remain at disproportionate risk. Addressing the late payments crisis is vital to the sustainability of the SME sector and safeguarding the millions of jobs it supports,” Ramotala concluded.
Business Partners Limited, Lawrence Ramotala All rights reserved. © 2026. Bizcommunity.com Syndigate Media Inc. Provided by (Syndigate.info).