Government institutions urged to pay suppliers on time

The National Treasury has urged government institutions to pay their suppliers on time and not contribute to the dire effects of the COVID-19 pandemic that has already put a strain on the financial sustainability of SMMEs.

This comes after the Treasury’s annual report on non-compliance with payment of suppliers’ invoices revealed that government departments had made a 63% improvement on the payment of suppliers’ invoices. The department released the report on Monday.

“The late and/or non-payment of supplier’s invoices have a negative impact on socio and economic challenges that our country is facing. To ensure that supplier operations continue without strain and financial difficulties, government institutions are urged to pay their suppliers on time,” the Treasury said in a statement.

The report shows that there was an improvement in the payment of invoices by government to service providers within 30 days in the 2021/22 financial year.

It said the number of invoices paid after 30 days by national and provincial departments in the 2021/2022 financial year amounted to 401 691 invoices with the Rand value of R 33.7 billion.

“The number of invoices older than 30 days and not paid by national and provincial departments at the end of March 2022 amounted to 67 862 with the Rand value of R 6.1 billion.

“There was a 63% improvement in the number of invoices older than 30 days and not paid at the end of the 2021/2022 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 2020/2021 financial year,” said the Treasury.

There was, however, a noticeable regression in the number of invoices paid after 30 days by national department and a regression in the number of invoices older than 30 days.

National Treasury has recommended:

• 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 who fail to comply with the requirements to pay invoices within 30 days and who undermine the systems of internal control be taken;
• Accounting officers take steps to ensure that the information to be submitted to the relevant treasury is duly signed off and submitted to the relevant treasury as per the timeframes stipulated in the National Treasury Instruction Note number 34;
• Accounting officers and chief financial officers address the root causes of the late and/or non-payment of invoices to improve compliance with the requirement of Treasury Regulation 8.2.3;
• Payment of suppliers within 30 days be a standing agenda item for discussion at every EXCO meeting of departments; and
• Accounting officers consider recommendations provided to improve the level of compliance with the requirement to pay supplier’s invoices within 30 days.

The department said the purpose of the annual report was to keep the relevant stakeholders abreast of non-compliance with the legislative requirements to pay supplier’s invoices within 30 days.

The report provides a trends analysis of what transpired in the 2021/2022 financial year when comparing with previous financial year analysis.

“The annual report also provides common reasons recorded by departments for late and/or non-payment of invoices and the continuous efforts taken by the National Treasury to improve compliance with the requirements to pay invoices within 30 days,” it said.

The National Treasury said Instruction Number 34 issued in 2011, requires departments to submit 30 days exception reports to the relevant treasuries by the 7th day of each month, with details of the number and Rand value of invoices paid after 30 days from the date of receiving invoices, the number and Rand value of invoices that are older than 30 days which remained unpaid, and the reasons for the late and/or non-payment of these invoices.

“The National Treasury continues to monitor the level of compliance with the requirement to pay supplier’s invoices within the prescribed period in terms of section 38(1)(f) of the Public Finance Management Act (PFMA), 1999 (Act No. 1 of 1999) and Treasury Regulation 8.2.3,” reads the statement.