By Charles Pittaway, Managing Director of Sage Pay
Recent research by Sage highlights that inequality and discrimination don’t just impact women in large corporates. Indeed, it identified a worrying trend: female entrepreneurs are more likely to suffer from late payments than their male counterparts.
With female business builders making up nearly 40% of the global workforce – and heading up 72% of micro-enterprises and 40% of small enterprises in South Africa – any kind of discrimination is unacceptable from a cultural and economic point of view, especially when it involves failure to pay what is owed.
The impact of late payments on small businesses has been widely discussed as an issue that must be eradicated for all entrepreneurs, regardless of gender. But inequality still exists and more needs to be done to eradicate it.
In South Africa, the stigma extends past culture, with 40% of Small & Medium Businesses failing to follow up on late payments to protect client relationships
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South Africa was among the six regions (out of 11) surveyed by Sage that reported higher instances of women business builders being paid late. Businesses run by female entrepreneurs in South Africa report that 18% of invoices are paid late and 10% of invoices are written off as bad debt.
Small businesses cannot absorb these costs nor the lost hours spent on admin – amounting to R564,000 in South Africa. The result can be disastrous: in the next 12 months, 1 in 4 female entrepreneurs will prioritise chasing late payments to be more cost efficient, and ironically will become less productive. If these businesses are not paid on time, they will also struggle to pay bonuses and suppliers, and will be forced to delay investments in their businesses.
The fact that late or non-payments is a more common occurrence experienced by female entrepreneurs is part of a wider problem. Women report more instances of sexist comments, disregard for their business ambitions and lack of female mentors as significant underlying reasons why there is now a heightened cultural stigma around chasing late payments amongst female entrepreneurs – more so than men.
In South Africa, the stigma extends past culture, with 40% of Small & Medium Businesses failing to follow up on late payments to protect client relationships. Time and resources are also challenges, with 24% of small businesses saying they don’t have a dedicated resource to chase payments and 13% saying they don’t have time.
There is no place for bias in business – all entrepreneurs should be free to pursue their ambitions without suffering the consequences of these cultural barriers that are encountered far too often – regardless of gender.
Now is the time to disrupt and challenge these harmful stereotypes and create a force for good, making sure that small businesses – the engine room of all economies – are paid what they are duly owed for the services they deliver to our economy.