Werner Henk Otto
Abstract
Given SMEs’ dependency on trade credit as often the only source of external capital, the influence of business environment variables, under their control, is important to business sustainability. Ample literature exists to support the value of internal business environment variables on SMEs’ trade credit management in either supporting business growth or undermining it. Despite this, a detailed review of key literature observing internal business environment influences, challenges, and suggested strategies to address these challenges for improved trade credit management observes as minimal. This paper aims to evaluate, through a literature review, the influence of certain internal business environment variables important to SMEs’ trade credit management, including challenges associated with these variables that could influence their trade credit management, and to suggest strategies to address these challenges for improved trade credit management. The background literature review on internal business environment variables and their influence on SMEs’ trade credit management from a developing country perspective was conducted on several journal articles. Peer-reviewed articles in recent journals were analysed to identify SMEs’ entrepreneurial and internal business environment, their significance, and associated challenges while managing trade credit to propose strategies to address internal business environment challenges for improved SME trade credit management. This review paper adds to a body of knowledge concerning the business environment within SMEs’ control and an understanding of how certain variables influence SMEs trade credit management while employing a developing country perspective to support the South African SME sector. The proposed strategies strive to better enable SME owners and managers to manage trade credit with a more complete understanding of internal business environment influences towards a conducive entrepreneurial ecosystem fostering sustainable SME creation.