Manufacturers tap suppliers to seal prompt payment gaps
Lewis Njoka @LewisNjoka
Manufacturers and suppliers have inked a deal seeking to curb late payments which have been a major impediment to liquidity for businesses in the past.
According to Kenya Association of Manufacturers (KAM), a Memorandum of Understanding (MoU) with Veri-Credit and the Association of Kenya Suppliers (AKS) will establish a partnership in the form of an industry credit group, which will promote proactive mitigation of credit risk management by businesses.
The Industry Credit Group will then promote best credit practices between businesses and their suppliers under the umbrella of trade associations.
Additionally, the group will be managed by Veri-Credit and will seek to significantly improve businesses’ cash flow, and drive a change in overall payment culture in Kenya.
KAM chair Mucai Kunyiha said the deal is timely, coming at a time when businesses are facing cash flow and liquidity challenges due to late or non-payment of bills by both the government and the private sector.
“Many businesses experience a lot of administrative and financial burdens due to late and non-payment.
Prompt payment is therefore critical to the performance and operations of any business, more so the small and medium-sized enterprises (SMEs),” Kunyiha said.
“Bad debts and poor debt collection methods contribute to the challenges facing small businesses.
When small businesses do not get their payments on time it means that they are also not able to pay their suppliers. Late payments to SMEs stifle innovation and growth of the manufacturing sector,” he added.
Veri-Credit Director, Stephen Mills termed the partnership a good move for manufacturers and suppliers.
“This is a creative and practical payment solution of immense value to manufacturers and suppliers.
It shall have a positive impact on the economy, by protecting jobs through enabling cash flow and liquidity for businesses across the country,” he said.
AKS chief executive, Ishmail Bett, expressed optimism that the partnership will resolve the perennial prompt payment challenges that have always affected suppliers.