By Phenyo Selinda
Pretoria – A recent report by the National Treasury reveals concerning trends in the timely payment of supplier invoices by both national and provincial government departments for the 2023/24 financial year. According to the annual report on non-compliance, a significant number of invoices are being paid late, impacting the financial well-being of suppliers and exacerbating socioeconomic challenges.
In the 2023/24 financial year, national and provincial government departments paid a staggering 362,068 invoices after the stipulated 30-day period. These delayed payments accumulate to a substantial R35.1 billion. Despite these invoices eventually being settled, the delays pose severe risks to the financial stability of suppliers.
At the close of March 2024, the data revealed a concerning backlog of unpaid invoices. National and provincial departments had 114,908 invoices older than 30 days, amounting to R10.7 billion, still pending.
National Treasury highlighted that, “the R35.1 billion, although paid late, was settled and paid during the 2023/24 financial year. The number of invoices older than 30 days and not paid by national and provincial departments at the end of March 2024 amounted to 114,908, to the rand value of R10.7 billion.”
National Departments: Slight Improvement Amid Wider Regression
National departments did show some minor improvements in addressing the backlog from the previous financial year. There was a reduction of R13 million in outstanding invoices. However, they also experienced a 24% increase in the number of unpaid invoices older than 30 days, totaling 1,427 invoices worth R53 million by the end of March 2024, compared to the previous year’s 1,149 invoices valued at R66 million.
Provincial Departments: Steep Decline in Performance
Provincial departments, on the other hand, demonstrated a notable regression. The backlog surged by 53%, with 113,481 unpaid invoices amounting to R10.6 billion by the end of March 2024 compared to 73,974 invoices worth R6.8 billion in March 2023.
Socioeconomic Impact
The delayed payments have far-reaching adverse effects beyond financial bookkeeping. National Treasury pointed out that, “the late and/or non-payment of supplier’s invoices impacts negatively on, amongst others, socioeconomic challenges such as high unemployment, inequality, poverty; the financial health of suppliers who are forced to borrow to keep financially afloat; and the ability of suppliers to pay salaries and meet their contractual obligations.”
Timely payments are crucial for fostering economic growth and alleviating poverty, inequality, and unemployment.
Actions Taken by National Treasury
To combat these issues, National Treasury has been actively monitoring and addressing payment delays through a dedicated centralised email system for supplier queries. In the past financial year, the Treasury received 245 queries amounting to R198 million. Of these, 52% were related to provincial institutions. The Treasury managed to resolve 54 queries worth R58 million via interventions from the Office of the Accountant-General.
Recommendations for Improvement
As part of ongoing efforts to streamline payments, National Treasury has proposed several measures:
- Address Root Causes: Accounting officers and chief financial officers must identify and rectify the underlying causes of payment delays to ensure adherence to Treasury Regulation 8.2.3.
- Compliance with Reporting: Accounting officers should ensure timely and signed submissions of required information as per National Treasury Instruction 34 of 2011.
- Agenda Priority: Payment of suppliers within 30 days should be a recurring agenda item in departmental EXCO meetings.
- Disciplinary Actions: There should be repercussions for officials who fail to comply with the 30-day payment regulation and undermine internal control systems.
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