THREE SMART STRATEGY TO HELP YOUR SMME MANAGE PAYROLL AND NEVER MISS A PAYMENT CASHFLOW MANAGEMENT IS A CRITICAL ASPECT OF RUNNING A SUCCESSFUL SMALL OR MEDIUM- SIZED BUSINESS . FOR MANY SOUTH AFRICAN BUSINESSES , ENSURING THAT THERE IS ALWAYS ENOUGH MONEY FOR PAYROLL AND SALARIES CAN BE A DAUNTING CHALLENGE . ACCORDING TO A SURVEY CONDUCTED AMONG OVER 500 SMALL AND MEDIUM-SIZED BUSINESSES IN SOUTH AFRICA , A STAGGERING 91 % OF THESE ENTERPRISES ARE GRAPPLING WITH THE REPERCUSSIONS OF LATE INVOICE PAYMENTS . THIS ALARMING TREND POINTS TO A GROWING CULTURE OF DELAYED PAYMENTS WITHIN THE BUSINESS LANDSCAPE . THE SURVEY , DETAILED IN THE STATE OF LATE PAYMENTS REPORT BY THE GLOBAL SMALL BUSINESS PLATFORM XERO , FURTHER REVEALS THAT THE AVERAGE OVERDUE INVOICE IS SETTLED APPROXIMATELY 18 DAYS ( ABOUT TWO AND A HALF WEEKS ) PAST ITS DUE DATE . SUCH DELAYS IN PAYMENTS HAVE PROFOUND CONSEQUENCES , SIGNIFICANTLY AFFECTING THESE BUSINESSES ' CAPACITY TO MEET THEIR OWN FINANCIAL COMMITMENTS , INCLUDING PAYING THEIR STAFF AND SUPPLIERS . “ PEOPLE ARE THE LIFEBLOOD OF ANY BUSINESS , SMALL OR LARGE . AS A RESULT , ENSURING A TIMELY PAYROLL AND SALARY PAYMENTS IS NOT JUST A LEGAL OBLIGATION BUT ALSO A MORAL ONE ,” SAYS MICHELLE AUSTIN , FINANCE DIRECTOR AT KEEGOR GROUP SA . HERE ARE THREE STRATEGIES SMALL AND MEDIUM BUSINESSES CAN USE TO ENSURE THAT THEY ALWAYS HAVE MONEY FOR PAYROLL / SALARIES :
• CREATE A DETAILED CASHFLOW FORECAST A CASHFLOW FORECAST IS A POWERFUL TOOL THAT CAN HELP SMES PREDICT THEIR FUTURE FINANCIAL NEEDS AND IDENTIFY POTENTIAL CASHFLOW GAPS . ACCORDING TO THE DEPARTMENT OF SMALL BUSINESS DEVELOPMENT ( DSBD ), CASHFLOW ISSUES ARE ONE OF THE PRIMARY REASONS WHY SMES FAIL IN SOUTH AFRICA , WITH 70 % TO 80 % OF THEM CLOSING THEIR DOORS WITHIN THE FIRST FIVE YEARS OF OPERATION DUE TO FINANCIAL DIFFICULTIES AND ONLY ABOUT HALF OF THE SURVIVORS LAST FOR THE SUBSEQUENT FIVE YEARS . " CASH FLOW FORECASTING IS THE BEDROCK OF FINANCIAL PLANNING FOR SMES . WITHOUT IT , YOU ' RE ESSENTIALLY NAVIGATING THROUGH A FINANCIAL BLIND SPOT ," EXPLAINS AUSTIN . TO ADDRESS THIS ISSUE , BUSINESSES SHOULD CREATE A DETAILED CASHFLOW FORECAST COVERING AT LEAST THE NEXT 12 MONTHS . THIS FORECAST SHOULD INCLUDE ALL SOURCES OF INCOME , SUCH AS SALES AND INVESTMENTS , AS WELL AS ALL EXPECTED EXPENSES , INCLUDING RENT , UTILITIES , SALARIES AND SUPPLIER PAYMENTS . BY TRACKING AND ANALYSING THESE NUMBERS , BUSINESS OWNERS CAN ANTICIPATE POTENTIAL CASHFLOW ISSUES AND TAKE PROACTIVE MEASURES TO ADDRESS THEM .
• IMPLEMENT EFFECTIVE INVOICING AND PAYMENT COLLECTION SYSTEMS LATE PAYMENTS FROM CUSTOMERS CAN SIGNIFICANTLY IMPACT A COMPANY ' S CASHFLOW AND MAKE IT CHALLENGING TO MEET PAYROLL OBLIGATIONS . RECENT RESEARCH SHEDS LIGHT ON THE IMPACT OF DELAYED PAYMENTS ON SOUTH AFRICAN SMES , WITH 48 % EXPRESSING THEIR GREATEST CONCERN ABOUT OVERDUE INVOICES AND CASH FLOW . THE
STUDY , CONDUCTED BY XERO , A PROMINENT CLOUD ACCOUNTING SOFTWARE PROVIDER , REVEALS THAT SMALL BUSINESS OWNERS DEDICATE AN AVERAGE OF 1.3 DAYS EACH MONTH TO CHASING UNPAID INVOICES , WITH THE TYPICAL INVOICE BEING SETTLED 10 DAYS BEYOND ITS DUE DATE .