Debtor and creditor practices of Canterbury SMEs
Author: H.P. (Herb) De Vries
Abstract: In New Zealand, small and medium size businesses (SMEs - fewer than 100 employees) make up 99% of all businesses and employ the largest proportion of the workforce, presently over 60%. Small businesses with five or less employees, alone, account for nearly a quarter of the country’s workers and constitute 87% of all business entities.
Yet the road for SMEs is not an easy one. Survival rates are statistically low, with success often necessitating a careful balancing of creative energy and the practicalities of financial discipline. of a significant financial challenge to SMEs is sustaining adequate cash-flow. As problems related to SME cash management are often perceived as a significant stumbling block to growth and, in many cases, their survival.
This study has examined the debtor and creditor management practices of Canterbury SMEs and has concluded that a major issue is that SMEs do not perceive debtor and creditor management as a high priority activity when the evidence clearly indicates that they should.