After months of frustration and economic strain, South Africans are finally breathing a sigh of relief with the 25 basis point interest rate cut by the South African Reserve Bank (SARB) in September.

Economists are now projecting another 125 basis point cuts by the end of March 2026—starting with an anticipated 25 basis point cut in November 2024, igniting further waves of renewed optimism across the country. This confidence is fuelled not only by local trends but also by global economic movements, particularly from the United States.

“While we welcome this positive shift in the lending environment, we must remember that it is not a signal to abandon prudent financial practices. It is important to note that these changes, although significant, will not provide immediate relief for many SMEs who continue to navigate a challenging landscape filled with high inflation and increased reliance on debt,” says Luncedo Mtwentwe, host of SAICA Biz Impact Podcast for small business.

The majority of SMEs are still reeling from the aftershocks of the pandemic, alongside ongoing issues such as water shortages, loadshedding, and persistently high fuel prices. These challenges have tested the resilience of many business owners, and the reality is that a significant number have had to rely on borrowed finance to survive. For them, these interest rate cuts mean reduced repayments, easing some of the financial pressures they’ve faced recently.

However, while the cost of financing is easing, making essentials like rental spaces, delivery vehicles, and wholesale goods more affordable, it’s vital for businesses to use this relief wisely says Mtwentwe.   “I strongly encourage business owners to prioritise robust financial management by exercising caution instead of rushing to increase spending. By staying cautious, you can safeguard your business against potential challenges, especially since the predicted rate cut in November is not guaranteed.”

Below he highlights some of the financial management strategies that SMEs should be prioristing at this time:

  1. Prioritise Cash Flow Management: Regularly monitor your cash flow to ensure that your business remains solvent. Create a detailed budget that accounts for both expected income and expenses. This will help you avoid financial pitfalls and make informed decisions about spending.
  2. Smart Borrowing: If you are considering taking on additional debt, ensure that it aligns with your long-term goals. Look for flexible lending options that offer favourable terms. This could involve securing loans with lower interest rates or considering alternative financing methods that do not impose hefty repayment burdens.
  3. Invest in Savings: As interest rates decrease, it becomes more viable to allocate a portion of your revenue towards savings. This could serve as a cushion during unforeseen circumstances, allowing your business to withstand economic fluctuations.
  4. Review Vendor Contracts: With the potential for reduced costs in goods and services, take the time to renegotiate contracts with suppliers. Striking better deals can improve your bottom line and provide you with additional resources for savings.
  5. Embrace Technology: Utilise financial management software to streamline your accounting processes and enhance efficiency. This can free up valuable time, allowing you to focus on strategic growth initiatives.

While we remain optimistic about further rate cuts in the coming months, it’s essential that SMEs—the backbone of our economy—approach this period with careful responsibility. Be wise with your finances—spend conservatively, prioritise savings and remember that true resilience in business comes from preparation and foresight,” says Mtwentwe.

He ends off by advising that SMEs should constantly be upskilling in all areas of their business, especially when it comes to financial management, and points to the various free online resources that are available to business owners, like entrepreneurial blogs, news sites, and podcasts. “Now is the time to turn to the experts, advisers and other small business owners from who you can learn from.”