Treasury warns that late or non-payment leads to unemployment, poverty and ruins companies’ financial health
THE NATIONAL Treasury wants directors-general, heads of government departments and chief financial officers (CFOs) who fail to pay suppliers’ invoices worth billion of rands within 30 days to be disciplined.
On Thursday, Treasury released its latest annual report on non-compliance with payment of suppliers’ invoices within 30 days.
The report revealed that the total value of invoices paid after 30 days by provincial departments during the 2020/2021 financial year was R25.9 billion, which is an improvement of R1.3bn compared to the 2019/2020 financial year, when the amount was R27.2bn.
Provincial governments also failed to pay invoices older than 30 days to the value of R5.3bn by the end of March this year.
In national government departments, the total value of invoices paid after 30 days between April 2020 and March this year was R4.1bn, which according to the report, represents a noticeable improvement of R2.6bn compared to the total value of invoices paid after 30 days between April 2019 and March last year, which stood at R6.7bn.
The National Treasury noted that there has been an improvement in the number of invoices paid after 30 days and the number of invoices older than 30 days not paid when comparing the 2020/2021 financial year to 2019/2020 despite the restrictions posed by the Covid-19 pandemic.
However, it admitted that these numbers still remain very high at a provincial level.
Treasury has warned that late or non-payment of invoices negatively impacts on the sustainability of the small, medium and micro enterprises leading to unemployment, job creation and worsening inequality.
Late and non-payment of invoices also negatively impacts the financial health of suppliers who are forced to borrow keep financially afloat and their ability to pay salaries and meet their contractual obligations.
It has recommended that payment of invoices within 30 days be included in the performance agreements of accounting officers (directors-general and heads of department), CFOs and other officials working in this area.
”Disciplinary action 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,” the report suggests.
It also wants the payment of suppliers within 30 days to be a standing agenda item for discussion at every executive committee meeting of government departments.