Local Government

Treasury strengthens

supplier payment efforts

Government is strengthening efforts to ensure suppliers do not run into financial difficulty because of the non-payment of invoices by the State.

According to the National Treasury, the COVID-19 pandemic has had a negative impact on the economy, businesses and many small, medium and micro enterprises (SMMEs). As a result, some SMMEs have been forced to close their doors, which has led to the retrenchment of employees.

“To ensure that suppliers' operations continue without strain, government institutions

are urged to pay their suppliers on time and not contribute to the dire effects of the pandemic that is already putting strain on these suppliers to remain sustainable,” says the department, in its Annual Report on Non-Compliance with Payment of Suppliers’ Invoices within 30 Days.

Queries portal

To assist suppliers, the National Treasury established a 30-day queries portal, which is a centralised email that can be accessed by suppliers to address their nonpayment queries.

The department follows up with transgressing institutions and suppliers are given reasons for the delay, and the date on which payment can be expected.

At a provincial level, these queries are escalated to provincial Accountants-General to elevate the matter to the respective Chief Financial Officers.

To monitor progress on payment of suppliers' invoices within the prescribed period, the National Treasury issued Treasury Instruction Note Number 34.

It requires departments to submit 30 days’ exception reports to the relevant treasuries by the 7th day of each month. This report has information pertaining to the preceding month.

Invoices

The information that departments are required to submit includes the number and value of invoices paid after 30 days of receipt of the invoices; the number and value of invoices that are older than 30 days, which remained unpaid; and the reasons for the late and non-payment of the invoices.

Treasury Instruction Note Number 34 requires departments to implement manual or electronic systems and processes that will enable departments to track invoices from the time they are received at the relevant cost centres, to the time that a payment is made.

The report on non-compliance shows that eight national departments or entities paid all their invoices within the 30-day timeframe in the 2020/21 financial year.

These were the National School of Government, Departments of Planning, Monitoring and Evaluation, Public Service and Administration, Traditional Affairs, Communications and Digital Technologies; Small Business Development; Sports, Arts and Culture; and Trade, Industry and Competition.

According to the report on non-compliance, common reasons provided by departments for late and/or non-payment of invoices include:  Misfiled, misplaced or unrecorded invoices;  Inadequate budget and/or cash flow management;  Inadequate internal capacity;  IT system issues.  Standard Chart of

Account related system problems;  Unresolved invoice discrepancies;  Incomplete supporting documents.

The reasons for the late and non-payment of invoices as provided by departments during the 2020/2021 financial year were the same reasons as those provided during the 2019/2020 financial year.

“This is mainly due to the fact that the root causes identified in the 2019/2020 financial year were not addressed in the 2020/2021 financial year. Furthermore, recommendations provided in the 2019/2020 financial year were also not considered in the 2020/2021 financial year,” notes the report.

Departments have been urged to address the root causes of the payment delays and nonpayments. They were also asked to implement the recommendations.

For the full report, go to www.treasury. gov.za