South Africa’s CFOs Face a Warning Signal: Liquidations Surge as Small Businesses Buckle 

The latest figures from July 2025 should give every chief financial officer in South Africa pause. Business liquidations rose sharply to 155 in the month, a 16.5% increase compared with July 2024. Close corporations carried the heaviest burden, with 26 more closures recorded than a year ago. On the surface this looks like another data point in a struggling economy. In reality it is a flashing red light for every finance leader charged with protecting their organisation’s future. 

The CFO’s Dilemma: Fragile Foundations, Rising Risks 

Small businesses are not only the backbone of employment in South Africa, they are also critical partners, service providers, and clients within larger corporate value chains. When they collapse, the damage ripples outwards. In July, liquidations were most pronounced in financing, insurance, real estate, and business services. These are sectors where corporates often depend on smaller entities for specialist functions. Trade, catering, accommodation, and construction followed closely. For CFOs, these failures represent far more than statistics. They bring contract breaches, service delays, unrecoverable receivables, and broken trust within supplier networks. 

Short-term trends confirm the fragility. Over the three months to July, liquidations rose by 12.4% compared with the same period last year. Year-to-date, the number of liquidations is already 1.8% higher than 2024. Coupled with the decline in the Business Confidence Index to 40 points, the outlook points to growing pessimism. Only four in ten businesses in cyclical sectors report satisfaction with conditions. For CFOs who must base forecasts and budgets on market sentiment, this loss of confidence is a serious concern. 

Pressure Points CFOs Cannot Ignore 

The numbers are a mirror of the lived experience of finance executives. Business costs remain stubbornly high, with energy insecurity and regulatory demands cutting deep into operational efficiency. Eskom’s persistent unreliability inflates costs across the economy. A heavy compliance burden, especially around tax, places small firms under pressure they cannot withstand. Interest rates, still elevated despite easing inflation, add to the suffocating financial environment. 

For CFOs, the challenge lies in recognising that the collapse of small business counterparts is not isolated. Each closure weakens interconnected systems. A supplier’s liquidation could leave your business exposed to production delays or the need to find higher-cost alternatives. A client’s closure could translate directly into write-offs and cash flow strain. Every failure reduces the resilience of the wider market in which your company must survive and grow. 

The Human and Strategic Cost 

The closures are also a human tragedy. Labour-absorbing industries like trade, construction, and services are losing firms at an alarming rate. Each closure strips workers of jobs, salaries, and benefits, often without warning. For households already stretched, the effect is devastating. For CFOs, this translates into a weakening consumer base. Rising unemployment reduces disposable income, which in turn contracts demand for products and services. The vicious cycle of job losses, lower spending, and further business failures places pressure on revenue forecasts and long-term strategic plans. 

Labour unions have raised their voices, calling for urgent government intervention. They warn of psychological distress, unpaid benefits, and deepening poverty. CFOs cannot ignore these warnings. A distressed labour market increases instability and heightens reputational risks for corporates seen as disconnected from the realities faced by workers and communities. 

Why CFOs Must Treat This as a Call to Action 

The picture is clear. South Africa’s recovery remains fragile, uneven, and at risk of further setbacks. While structural reforms are necessary, CFOs cannot wait for government policy alone to shift conditions. Finance leaders must act now to insulate their organisations from systemic shocks and prepare for prolonged turbulence. 

Key steps include: 

• Stress-testing financial models against both supplier and client failures, identifying exposure across your value chain. 

• Re-evaluating liquidity buffers and building stronger working-capital strategies that anticipate delayed payments and defaults. 

• Implementing robust early-warning systems for counterparty risk, including tighter monitoring of receivables and supplier health. 

• Reviewing debt structures and exploring refinancing options to mitigate the cost of high interest rates. 

• Engaging actively with policymakers, business bodies, and unions to push for reforms that ease the burden on small businesses and stabilise the operating environment. 

Final Thought 

For South Africa’s CFOs, the liquidation statistics are not a distant problem confined to SMMEs. They are a warning signal that the very fabric of the economy is fraying. Each closure reduces resilience, undermines employment, and weakens the markets in which your organisation must operate. 

The numbers are clear. The ecosystem on which your balance sheet depends is under stress. Without proactive action, the fragility of small businesses will spill over into larger enterprises, eroding profitability, growth prospects, and long-term sustainability. 

CFOs must not only watch the numbers but also act decisively beyond them. Safeguarding your business today means preparing for more closures tomorrow. The health of small businesses is directly tied to your ability to protect jobs, secure revenue, and deliver value to stakeholders in the years ahead.