Manufacturers to curb late payment through Industry Credit Group

Manufacturers have signed a Memorandum of Understanding (MoU) towards the establishment of an Industry Credit Group to curtail the late payment culture.

Kenya Association of Manufacturers (KAM), Veri-Credit and Association of Kenya Suppliers (AKS) have partnered to promote the mitigation of credit risk management by businesses. 

The KAM Industry Credit Group, managed by Veri-Credit, is the first-ever system that will be established in the country to promote best credit practices between businesses and their suppliers under trade associations. It will also seek to significantly improve businesses’ cash flow and drive a change in overall payment culture in Kenya.

The partnership comes at a critical 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). 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 stifles innovation and growth of the manufacturing sector,” said KAM Chair, Mucai Kunyiha.

Veri-Credit Director, Stephen Mills noted that the partnership is a step in the right direction for manufacturers, suppliers and Kenyans saying, “It shall have a positive impact on the economy, by protecting jobs through enabling cash flow and liquidity for businesses across the country.”

The perennial prompt payment challenges have impacted on suppliers and AKS CEO, Ishmail Bett says the partnership will work to resolve the issues.

Globally, Trade Association Industry Credit Groups are membership-based and work by permitting credit professionals - in different association member companies - serving the same customer, to compare payment practices. They compare negative information on collective history and exchange data on payment practices.