Late payments create all sorts of cash flow headaches. In the wake of the coronavirus pandemic and its horrifying economic effects, a cash flow problem could bring a business to its knees.
For the small business owner, it means a period of financial distress that could hinder the development of both mind and body.
At a time when panic and uncertainty remain high – economists have already forecasted a possible cash crunch that could clobber the county’s already fragile economy.
Late payments to businesses during this period will only make the situation more dire.
Spare liquidity and strong balance sheets may cushion huge corporations. But it is small businesses that could pay a huge price if the COVID-19 crisis endures.
As the virus rages on, Absa bank will be looking to spread ‘Africanancity’ to its long list of suppliers who include small businesses everywhere in the country. The lender has pledged to cut out unhealthy payment delays.
In a statement seen by Maudhui House, the bank said it will pay all its suppliers within a fortnight. The ones owed a million or less will receive their money within one week.
During a televised speech last week, President Uhuru Kenyatta declared that he would be counting on God’s grace and a collaborative spirit among patriotic citizens and key organizations (including banks) – to minimize the terrible economic impact of COVID-19.
Absa’s move to pay suppliers quickly is an encouraging one. It is also uniquely aligned to the President’s recommendation that institutions show empathy to their customers and trading partners in the wake of the coronavirus pandemic.
The lender, whose asset base is fast approaching $100 Billion dollars, has also declared that it is open to restructuring and extending repayment periods for customers with active personal and business loans.
“Customers who may be experiencing financial strain due to the prevailing circumstances can speak to our personal bankers and relationship managers to discuss a suitable repayment plan. We will provide options for customers to either restructure their loans by reducing their monthly installments over a period of up to one year, or take a short-term repayment holiday”, reads a statement from the bank.
“The Bank will assess each case based on its individual merit and respond to requests within 7 days,”
On its part, the Central Bank of Kenya (CBK) says that while the extent of the adverse effects of the pandemic are still evolving, it is already evident that the impact on some of the customers may be severe.
As visits to banking halls become less fashionable not to mention risker, Absa bank is also encouraging its customers to turn to its buffet of digital banking alternatives and to avoid cash transactions.