8 in 10 SMEs hit by arrears

It has overtaken interest payments as the number one concern.

8 in 10 or 81% of small- to medium-sized enterprises (SME) are suffering from late customer payments, credit bureau DP Information (DP Info) Group revealed.

According to its SME Development (SMED) Survey, customer payment problems have overtaken high-interest rates as the dominant finance-related issue confronting SMEs.

Overall, 35% of SMEs have finance-related issues, the highest percentage since the survey began tracking the issue in 2011.

The proportion of SMEs with finance-related issues increased across all sectors, with notable jumps in information & communications, which went up 16%, and manufacturing, which also increased 16%.

"The gap between supplier terms and the credit given to customers, along with slower customer payments, is increasing the risk of cash flow and working capital problems. Cash flow constraints have the potential to hold back the growth strategies SMEs intend to pursue during the next 12 months," DP Info said.

The group also feared a domino effect could cause more SMEs to experience cash flow shortages which in turn will lead to them delaying payment to their customers.