Government has mixed results in paying suppliers on time

Recommends that level of compliance be included in accounting and chief financial officers’ performance agreements.
The National Treasury monitors levels of compliance with requirements to pay suppliers' invoices within 30 days in terms of a section of the Public Finance Management Act. Image: Moneyweb

National Treasury’s annual report on non-compliance with payment of suppliers’ invoices within 30 days, published on Monday, shows that 401 691 invoices amounting to R33.7 billion, were paid by national and provincial departments within the stipulated payment period in the 2021/22 financial year.

“There was a 63% improvement in the number of invoices older than 30 days and not paid at the end of the 2021/22 financial year, which amounted to 134 invoices to the rand value of R5 million when compared to 358 invoices to the rand value of R426 million reported at the end of the 2020/21 financial year,” it says.

Read: SMEs need urgent support

Just over 67 800 invoices that were older than 30 days, valued around R6.1 billion, were unpaid at the end of March 2022.

It says there, however, was a noticeable regression in the number of invoices paid after 30 days by national departments and a regression in the number of invoices older than 30 days.

National Treasury made the following recommendations for improvement:

  • Payment of invoices within 30 days be included in the performance agreements of accounting officers, chief financial officers and other officials working in this area,
  • Disciplinary actions against officials failing to comply with the requirement to pay invoices within 30 days and who undermine the systems of internal control to be taken,
  • Accounting officers take steps to ensure that information submitted to relevant treasury is duly signed off and submitted to relevant treasury as per timeframes prescribed in National Treasury Instruction Note number 34,
  • Accounting officers and chief financial officers to address root causes of late and/or non-payment of invoices to improve compliance in line with Treasury Regulation 8.2.3,
  • Payment of suppliers within 30 days be a standing agenda item for discussion at every department Exco (executive committee) meeting,
  • Accounting officers to consider recommendations provided to improve level of compliance with required payment of supplier’s invoices within 30 days.

The National Treasury’s Instruction Number 34, issued in 2011, requires departments to submit 30 day ‘exception reports’ to relevant treasuries by the 7th day of each month.

Read:
Government owes SMEs more than R3bn [June 2021]
Corporates commit to paying SME suppliers within 30 days [Nov 2020]

This includes providing details on the number and rand value of invoices paid after 30 days from the date invoices are received and invoices that are older than 30 days which remained unpaid and related reasons for late and/or non-payment.

“The late and/or non-payment of supplier’s invoices have a negative impact on socio and economic challenges that our country is facing,” adds National Treasury.

The department says it monitors the level of compliance with requirements to pay suppliers’ invoices within 30 days in terms of Section 38(1)(f) of the Public Finance Management Act (PFMA), 1999 (Act No. 1 of 1999) and Treasury regulations.

“To ensure that supplier operations continue without strain and financial difficulties, government institutions are urged to pay their suppliers on time and not contribute to dire effects of the pandemic that has already put a strain on the financial sustainability of SMEs.”

Nondumiso Lehutso is a Moneyweb intern.

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