The management of trade creditin small and medium-sized enterprises

[摘要] English: Of the economically active population in South Africa, approximately 24.5% are unemployed (Statistics South Africa, 2009). South Africa experiences severe income inequality and high levels of poverty. SMEs are expected to be an important vehicle to address the challenges of job creation and sustainable economic growth. The chance of survival for SMEs is less likely in South Africa than in any other GEM country sampled in 2005, according to Von Broembsen, Wood and Herrington (2005). The mismanagement of trade credit could be a cause of failure for SMEs in South Africa.The primary objective of this study was to determine the trade credit-management practices of SMEs in order to establish whether trade credit is being mismanaged by SMEs in South Africa. To achieve this objective, it was necessary to determine and illustrate the trade credit-management practices of SMEs in order to establish whether SMEs find it difficult to manage trade credit successfully and fail to use trade credit effectively as a source of funding. Understanding and explaining possible reasons why SMEs find it difficult to manage trade credit successfully is important in explaining if SMEs' fail due to the mismanagement of trade credit within their own practices. For this purpose, this study made use of an e-mail survey and developed an online questionnaire as the primary data-collection instrument.This online questionnaire, administered to 352 SME respondents, was developed following a thorough review of the literature on debtors and credit policy for SMEs along with the business environment and SMEs. Empirical research was conducted to determine the trade credit-management practices of SMEs in South Africa and, in doing so, establish the reasons why SMEs find it difficult to manage trade credit successfully and fail to use trade credit effectively as a source of funding. The statistical analyses included statistical techniques such as descriptive statistics, frequencies, cross-tabulations and mean scores. In addition, the matched samples t-test and the McNemar test were used in conducting comparison testing between two different classification values, namely debtors and creditors. Recommendations were made to improve the management of trade credit among SMEs. The findings suggested that SMEs should make use of a sound and structured credit policy before granting trade credit to a customer, in order to strengthen and improve the management of trade credit among SMEs. Furthermore, credit policies must be structured and tightened up in order to increase the effectiveness of SMEs' credit policies, especially focusing on the relevant credit components as set out in the credit policy of the SME. The recommendations also included that SMEs should, as far as possible, try not to prolong the payment owed to other SMEs and/or clients. Training and communication can also help SME owners understand the concepts of effectively managing trade credit. In addition, owners of SMEs should network by attending seminars.

[发布机构] University of the Free State