Total workspace solutions provider, Nashua, has welcomed the Government’s plans to strengthen access to justice for small and medium enterprises (SMEs) and reduce red tape through the introduction of the National Small Enterprise Amendment Bill. In particular, the establishment of a small business ombud could help to create fairer power dynamic between small businesses and larger enterprises.
Barry Venter, CEO at Nashua, says that seeking justice in the courts is expensive and time-consuming for small businesses. As a result, most small business owners are reluctant to initiate legal action when they have a dispute with business-to-business (B2B) customers and suppliers. An efficient ombud’s office could help them to resolve such conflicts faster and without the need to incur hefty legal fees.
Venter says that one of the major challenges SMEs face relates to getting paid on time, with many large customers managing their cash flow by delaying payments to their suppliers. Research shows that 91% of SMEs are currently owed money outside their payment terms and have, on average, nearly R100,000 outstanding at any given time.
“Small business owners often feel powerless when a larger customer delays payments beyond 30 days or 60s days, or even defaults,” says Venter. “The knock-on effects of late or non-payment may include SMEs not being able to pay their suppliers and employees or needing to take out loans to make their payments. This bill, if enacted, could help SMEs to improve their cash flow and financial health.”
The provisions of the bill are wide and go far beyond non-payment. It enables business owners to dispute incidences of:
· “unfairness”
· “abuse or unjustifiable exercise of power or unfair or other improper conduct or undue delay”, and
· “practice, act or omission which results in unlawful or improper prejudice to a small enterprise”.
Venter says that this could offer SMEs protection against abuses such as larger companies using their market power to extract predatory pricing or unreasonable terms and conditions from smaller suppliers and customers. Other examples might be a customer unreasonably disputing a credit card transaction or a large company trying to make unilateral changes to a business contract.
Says Venter: “Given that our franchisees are SMEs who serve the SME community, we understand the challenges small businesses sometimes face in getting paid on time and treated fairly. Levelling the playing fields and empowering these businesses could help boost their confidence and help them to thrive in a challenging landscape.”
