Impact of late payment by the Health Department on small, medium and micro enterprises in Ngaka Modiri Molema District

Abstract

The purpose of this study is to investigate the impact of late payment by the North West Department of Health on Small, Micro and Medium Enterprises (SMMEs) rendering services in the Ngaka Modiri Molema District. Between 2007 and 2014, approximately 440 000 small businesses in South Africa closed down due to cash flow problems as a result of late payments by public sector institutions. Late payments by the North West Department of Health for services rendered by SMMEs have been a cause of concern due to its ripple effects on the survival of the SMMEs. To address the research problem, a descriptive survey research design with a review of literature combined with a quantitative approach was used. Coded questionnaires were designed and administered to a sample of 100 randomly selected SMMEs in the Mafikeng area of South Africa. In total, 84 completed questionnaires were returned and considered valid for statistical analysis. The study identified that late payments have created significant cash flow problems for the majority of the SMMEs and their impact is so severe that some of the SMMEs have closed down their businesses. Specific strategies are recommended to assist SMMEs experiencing late payment as well as for future research .