SMEs: Owners claim EOH is not paying them in time

Published May 6, 2020


JOHANNESBURG - Technology group EOH Holdings has been accused of not paying suppliers, crippling small and medium-sized enterprise (SME) vendors and even causing some suppliers to close down.

A small business owner who spoke on condition of anonymity said EOH had refused to give indications on when payments would be made and there was no communication to vendors from the company's finance department.

The owner said several small businesses were owed millions by EOH, with some payments overdue by more than three months.

EOH yesterday rejected claims, saying it had many initiatives in place to ensure timeous payments in this time.

A company spokesperson said EOH remained committed to improving cash collections, cost management and managing its business in a way that ensured that it was sustainable.

“EOH engages many SMEs across its various business units, which together with credit controllers liaise with suppliers on a weekly basis to load accounts payable,” the company said. “In those instances where some business units’ suppliers have been severely impacted by Covid-19, EOH has approached these suppliers to assist with payment terms.

“EOH promotes fair contracting and is committed to honouring its contractual obligations and supporting its suppliers as much as possible,” said the spokesperson.

This is not the first time that small businesses have had their payments delayed by the holding company, according to the sources, but “since the outbreak of Covid-19, the delays have worsened”.

The small business owners expressed their frustration about this, stating that they were unable to pay contractors who contract through them and in some instances have had to borrow to finance their commitments to contractors, incurring interest costs from lenders.

Some admitted to having issued letters of demand to EOH, but nothing concrete came out of that engagement and, as a result, they have considered going the legal route.

Others opted to wait as they feared losing out on future contracts with the JSE-listed company.

EOH has said that it expected its loss per share to fall to 527 cents in the six months to end January, from 1702c last year.

The group said headline loss per share would also decrease to 381c from 840c in the preceding year.

The National Small Business Chamber (NSBC) made a plea to big businesses and the government to pay their small business suppliers on time, as this was one of the biggest challenges faced by small businesses.

The NSBC said if the problem persists too long, it could ultimately shut down some small businesses.

NSBC founder and chief executive Mike Anderson said now was the time to ensure that all small business suppliers were paid timeously. “Covid-19 and the economic downturn has and will continue to have a devastating impact on small businesses throughout South Africa. For any business, the amount of money flowing in or out is crucial to its success,” he said.


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