SMEs perception related to their trade credit management effectiveness

Abstract

Purpose: To determine small and medium-sized enterprises’ (SMEs) perception related to their trade credit management effectiveness.Design/methodology/approach: Quantitative research design with purposive sampling as the sampling method, administrated to 10 450 SMEs within South Africa.Findings/results: The results indicate SMEs perceive their trade credit management as effective.Practical implications: The article reveals how SMEs perceive their trade credit management by identifying their effectiveness in managing trade credit.Originality/value: By raising awareness pertaining to SMEs’ perceptions around their trade credit management effectiveness, SMEs can become more observant of their own trade credit management effectiveness and overall finances. Thereby, SMEs’ awareness could be improved to become financially viable and, in so doing, empower SMEs to foster economic development within South Africa. Given the results revealing SMEs’ perception as effective in managing trade credit, the study adds value by providing insight as to what financial problems, apart from trade credit ineffectiveness, could contribute to their business failure. There is a need therefore to investigate why SMEs continue to fail at such high rates because of financial problems in order to determine the root causes and types of financial problems contributing to SME business failure.