00:00:03
Speaker 1: Finance Future thirteen minutes to to o'clock. In our finance feature for today, we're talking about delayed payments and hal of course they destroy small businesses, and I want to hear from all of you around that A double one double a three seven oh two. So what tap line oh seven two seven o two and seven oh two? In this finance feature is brought to you by stand lob Asset Management invest in More and we have joining us the CEO of Bridgement, Daniel Goldberg. Welcome to the show, Daniel, Thank you for joining us.
00:00:32
Speaker 2: Thanks really good to be with you today.
00:00:35
Speaker 1: Daniel, you sound like we are on the speaker or something. We can't hear you properly. Here we go, Yes, yes, so if you can just keep us on your handset, so let's talk about now we're having feedback. Is your radio on?
00:00:55
Speaker 2: No?
00:00:56
Speaker 1: Oh, I'm not sure what's happening, but I'm gonna pass you back on to our producer. Let's make sure we solve that as we take a break. When we come back, we continue to get your questions and comments in audible one double a three oh seven oh two The whatsap line oh seven two, seven oh two one seven o two two, nine minutes to two o'clock. We are going to try again. We're chatting to Daniel Goldberg, CEO of Bridgement, around delayed payments and how they are destroying small businesses.
00:01:26
Speaker 3: A double one.
00:01:26
Speaker 1: Double A three oh seven oh two in the WhatsApp line oh seven two seven o two and seven oh two. Let's try that again, Daniel, welcome back.
00:01:34
Speaker 2: Ye hopefully this is a ah, there we go.
00:01:36
Speaker 1: Whatever you did, keep it that way. So we here are figures like twelve point four billion rand in over due invoices, which sounds absolutely crazy, But what does that translate to on the ground, especially for SMEs.
00:01:53
Speaker 2: No, it's a it's a huge problem. Small businesses are really struggling with late payments. And want to be clear, this is by no means only a public sector or government issue. I think the same issue exists in the large corporate private sector where small businesses are just taking way too long to get paid. And sadly, I don't believe this is just an inefficiency or administrative delay. It actually seems like it's become part and parcel of how business is done in the country. It seems to be a structural problem and almost a normalized behavior to just pay small businesses later because they don't have to there's no repercussions if they take too long to pay, and then knock on effects throughout the economy are massive. You know, when over sixty percent of employment comes from SMEEs. When a small business is not paid on time, that means he can't pay pay his staff on time. It means you can't create new jobs, and it can have huge knock on effects to other businesses that that small businesses trade a trade with as well.
00:03:01
Speaker 1: And I think you are raising such critical informations. Also the part of recognizing that it might the government might get the bigger flag, but the reality is in the private sector. I mean I was hearing about some people having to sign up for tees and sees of getting paid after one hundred and twenty days.
00:03:21
Speaker 2: Oh yeah, absolutely, And the truth is the problem often is even worse than one hundred and twenty days, because that it might be one hundred and twenty days from the date that the small business sends the invoice to the corporate or to the government by a body that's going to pay them. But actually what had to happen often is that small business had to incur costs two three months prior to that, they had to bar raw materials or bar inventry. They had to pay salaries, that had to pay rent, and then they had to deliver a product or a service to a corporate customer or a government entity as a customer, and then they have to wait one hundred and twenty days. So actually you can see them being out of pocket for you know, as high as one hundred and fifty days, which is close to impossible to survive. I mean, we know that most small businesses don't fail because they're unprofitable. They fail because of cash flow. So it might be profitable on paper, but if they don't have cash, they cannot survive. And the number one cited reason for small businesses struggling with cash flow is late paying customers.
00:04:29
Speaker 1: So if now we look at the different types of SMEs and industries, which would you say gets hit particularly harder than others.
00:04:41
Speaker 2: The truth is we see almost all types of small businesses being affected by this across industries. So I mean, at bridgement, we are assisting businesses of working capital across all sectors, and we see that the ones that are supplying into large corporates and into government oftentimes struggle the most. And those can be manufacturers, they can be professional services, they can be wholesalers, distributors. This construction that's really across all sectors. And the reason why we see these businesses that's applying to corporate and governments struggling them most is because of the time that it takes them to get paid and all of the administrative burden. It's really difficult and there is a huge power imbalance between them and their customer. You know, when a small business wins a contract or a tender, they are so happy to win that contract and they will almost take any terms that are given to them. There's really no position from which they can negotiate all request to be paid quicker. So it really is difficult for most businesses that are supplying into corporates and government, regardless of the industry that they're in.
00:05:54
Speaker 1: And the worst part of course is you know the even if the project, for example, now gets delayed, it adds to that time while you may have already started incurring costs. So it does become quite tricky in that regards. There's a WhatsApp message that says relay the cycle of delayed payments literally kills small business. We lose our good credit profiles and don't have access to credit tools, and we have to borrow money at high interest rates that dilute viability of our businesses. We are job creators and many families are affected by the closure of small businesses. And then we also have a voice note on seven two seven oh two one seven oh two.
00:06:41
Speaker 3: And listeners a small goer from idelwork yes delayed by months. One of your biggest and most active light biers is the South African government, especially when it comes to building materials and building sites. They love to put everything on the rate type and the rate type and the rate type.
00:07:10
Speaker 1: And at the end of the day, it takes.
00:07:12
Speaker 3: One hundred and fifty two hundred and ninety days to get payment and there's not a lot of small businesses that can actually survive that.
00:07:22
Speaker 1: Yeah, that is a tough one, Daniel. What are your thoughts on that message? And that voice note with another one is saying good oftenoon have not been paid by Department of Health since last year June. Everything was done, invoice submitted. I spent almost one million rand today zero money. They keep saying payments run will be done soon. But not happening. This is from anonymous.
00:07:48
Speaker 2: Yeah, it's unfortunately a really difficult situation. You know, when you're supplying a corporate or government body, it is you have to follow all of their processes and they have extremely strict rules around how you invoice and send statements and when certain cutoffs before which you know payments can be made or you have to submit all the right documentation in exactly the right format, and if one mistake is made, oftentimes that can result in you know, you're having to wait till the next payment cycle the following month. So I think the sort of clips that we give at bridgement to most of the semes that we're dealing with is follow the process as much as possible. Get to make sure you're invoicing early and always on time. Make sure that you have a relationship with you ever on the account payable or procurement department on the other side, who's responsible for paying those invoices. That always goes a long way. I think in addition to that, just being in the space that we're in funding sms, we always say always have a backup, have a backup credit facility, have a backup overdraft. You know, any form of funding that you can rely on when you need it. But I always say to businesses, I'd much rather use a funding in your business finance to grow, to thrive, and not just to manage cash flow or survive. You know, late payments from from your customers, So always use it wisely and always prioritize getting paid quicker from your customers as much as possible. You know where its possible. Oftentimes it's out of your hands, unfortunately, but you can do things in the perfect way as much as possible to try and increase your chances of getting paid on time.
00:09:27
Speaker 1: Sure. Daniel Goldberg, CEO of Bridgeman, thank you so so much for enlightening us with that information and sharing in the next
Speaker 1: Finance Future thirteen minutes to to o'clock. In our finance feature for today, we're talking about delayed payments and hal of course they destroy small businesses, and I want to hear from all of you around that A double one double a three seven oh two. So what tap line oh seven two seven o two and seven oh two? In this finance feature is brought to you by stand lob Asset Management invest in More and we have joining us the CEO of Bridgement, Daniel Goldberg. Welcome to the show, Daniel, Thank you for joining us.
00:00:32
Speaker 2: Thanks really good to be with you today.
00:00:35
Speaker 1: Daniel, you sound like we are on the speaker or something. We can't hear you properly. Here we go, Yes, yes, so if you can just keep us on your handset, so let's talk about now we're having feedback. Is your radio on?
00:00:55
Speaker 2: No?
00:00:56
Speaker 1: Oh, I'm not sure what's happening, but I'm gonna pass you back on to our producer. Let's make sure we solve that as we take a break. When we come back, we continue to get your questions and comments in audible one double a three oh seven oh two The whatsap line oh seven two, seven oh two one seven o two two, nine minutes to two o'clock. We are going to try again. We're chatting to Daniel Goldberg, CEO of Bridgement, around delayed payments and how they are destroying small businesses.
00:01:26
Speaker 3: A double one.
00:01:26
Speaker 1: Double A three oh seven oh two in the WhatsApp line oh seven two seven o two and seven oh two. Let's try that again, Daniel, welcome back.
00:01:34
Speaker 2: Ye hopefully this is a ah, there we go.
00:01:36
Speaker 1: Whatever you did, keep it that way. So we here are figures like twelve point four billion rand in over due invoices, which sounds absolutely crazy, But what does that translate to on the ground, especially for SMEs.
00:01:53
Speaker 2: No, it's a it's a huge problem. Small businesses are really struggling with late payments. And want to be clear, this is by no means only a public sector or government issue. I think the same issue exists in the large corporate private sector where small businesses are just taking way too long to get paid. And sadly, I don't believe this is just an inefficiency or administrative delay. It actually seems like it's become part and parcel of how business is done in the country. It seems to be a structural problem and almost a normalized behavior to just pay small businesses later because they don't have to there's no repercussions if they take too long to pay, and then knock on effects throughout the economy are massive. You know, when over sixty percent of employment comes from SMEEs. When a small business is not paid on time, that means he can't pay pay his staff on time. It means you can't create new jobs, and it can have huge knock on effects to other businesses that that small businesses trade a trade with as well.
00:03:01
Speaker 1: And I think you are raising such critical informations. Also the part of recognizing that it might the government might get the bigger flag, but the reality is in the private sector. I mean I was hearing about some people having to sign up for tees and sees of getting paid after one hundred and twenty days.
00:03:21
Speaker 2: Oh yeah, absolutely, And the truth is the problem often is even worse than one hundred and twenty days, because that it might be one hundred and twenty days from the date that the small business sends the invoice to the corporate or to the government by a body that's going to pay them. But actually what had to happen often is that small business had to incur costs two three months prior to that, they had to bar raw materials or bar inventry. They had to pay salaries, that had to pay rent, and then they had to deliver a product or a service to a corporate customer or a government entity as a customer, and then they have to wait one hundred and twenty days. So actually you can see them being out of pocket for you know, as high as one hundred and fifty days, which is close to impossible to survive. I mean, we know that most small businesses don't fail because they're unprofitable. They fail because of cash flow. So it might be profitable on paper, but if they don't have cash, they cannot survive. And the number one cited reason for small businesses struggling with cash flow is late paying customers.
00:04:29
Speaker 1: So if now we look at the different types of SMEs and industries, which would you say gets hit particularly harder than others.
00:04:41
Speaker 2: The truth is we see almost all types of small businesses being affected by this across industries. So I mean, at bridgement, we are assisting businesses of working capital across all sectors, and we see that the ones that are supplying into large corporates and into government oftentimes struggle the most. And those can be manufacturers, they can be professional services, they can be wholesalers, distributors. This construction that's really across all sectors. And the reason why we see these businesses that's applying to corporate and governments struggling them most is because of the time that it takes them to get paid and all of the administrative burden. It's really difficult and there is a huge power imbalance between them and their customer. You know, when a small business wins a contract or a tender, they are so happy to win that contract and they will almost take any terms that are given to them. There's really no position from which they can negotiate all request to be paid quicker. So it really is difficult for most businesses that are supplying into corporates and government, regardless of the industry that they're in.
00:05:54
Speaker 1: And the worst part of course is you know the even if the project, for example, now gets delayed, it adds to that time while you may have already started incurring costs. So it does become quite tricky in that regards. There's a WhatsApp message that says relay the cycle of delayed payments literally kills small business. We lose our good credit profiles and don't have access to credit tools, and we have to borrow money at high interest rates that dilute viability of our businesses. We are job creators and many families are affected by the closure of small businesses. And then we also have a voice note on seven two seven oh two one seven oh two.
00:06:41
Speaker 3: And listeners a small goer from idelwork yes delayed by months. One of your biggest and most active light biers is the South African government, especially when it comes to building materials and building sites. They love to put everything on the rate type and the rate type and the rate type.
00:07:10
Speaker 1: And at the end of the day, it takes.
00:07:12
Speaker 3: One hundred and fifty two hundred and ninety days to get payment and there's not a lot of small businesses that can actually survive that.
00:07:22
Speaker 1: Yeah, that is a tough one, Daniel. What are your thoughts on that message? And that voice note with another one is saying good oftenoon have not been paid by Department of Health since last year June. Everything was done, invoice submitted. I spent almost one million rand today zero money. They keep saying payments run will be done soon. But not happening. This is from anonymous.
00:07:48
Speaker 2: Yeah, it's unfortunately a really difficult situation. You know, when you're supplying a corporate or government body, it is you have to follow all of their processes and they have extremely strict rules around how you invoice and send statements and when certain cutoffs before which you know payments can be made or you have to submit all the right documentation in exactly the right format, and if one mistake is made, oftentimes that can result in you know, you're having to wait till the next payment cycle the following month. So I think the sort of clips that we give at bridgement to most of the semes that we're dealing with is follow the process as much as possible. Get to make sure you're invoicing early and always on time. Make sure that you have a relationship with you ever on the account payable or procurement department on the other side, who's responsible for paying those invoices. That always goes a long way. I think in addition to that, just being in the space that we're in funding sms, we always say always have a backup, have a backup credit facility, have a backup overdraft. You know, any form of funding that you can rely on when you need it. But I always say to businesses, I'd much rather use a funding in your business finance to grow, to thrive, and not just to manage cash flow or survive. You know, late payments from from your customers, So always use it wisely and always prioritize getting paid quicker from your customers as much as possible. You know where its possible. Oftentimes it's out of your hands, unfortunately, but you can do things in the perfect way as much as possible to try and increase your chances of getting paid on time.
00:09:27
Speaker 1: Sure. Daniel Goldberg, CEO of Bridgeman, thank you so so much for enlightening us with that information and sharing in the next
