While Minister in the Presidency for Planning, Performance, Monitoring and Evaluation Jeff Radebe’s commented last month that the time taken by government to pay suppliers was improving, small business representative organisation AHI has identified areas where there is room for improvement.
If the number of suppliers has remained constant over the past year, the statistics cited by the Minister show that there is reason to celebrate progress at provincial level, though there still are outstanding and unpaid invoices of R5.3-billion, according to AHI.
Meanwhile, at national level, the number of invoices taking more than 30 days to be paid is roughly equivalent to those paid on time. “This is still unacceptable,” says AHI CEO Dr Ernest Messina.
However, he echoes the Minister in emphasising that AHI members and other small and medium-sized enterprises (SMEs) should ensure that invoices are valid and issued with appointment letters, purchase orders and other documents.
“By submitting all the required information at the time of invoicing, SMEs will have a better chance of prompt payment. Further, while government contracts are tempting, SMEs are thoroughly supported by enabling legislation and should seek to diversify their revenue streams,” Messina suggests.
Setting an Example
Last month, in a community radio phone-in programme, Radebe highlighted the strides made in the payment of suppliers to government within 30 days of submitting an invoice.
He outlined that, in 2011, the Department of Planning, Monitoring and Evaluation established a special unit that works in a trilateral partnership with the National Treasury and the Department of Public Service and Administration to investigate cases of late or nonpayment of legitimate invoices within 30 days.
The unit identifies the causes of delays and nonpayment, facilitates the process for instituting misconduct proceedings and supports interventions in cases of continuous noncompliance.
Moreover, it is now a requirement for all directors-general to report to the Forum of South African Directors-General on the timeous payment of suppliers.
During the radio programme, the Minister interacted with listeners from various provinces who raised issues related to government support for small business, as well as the processes required for conducting business with government.
The Minister noted that, while government was keen on helping black-owned SMEs, all service providers who wished to do business with government had to adhere to all the relevant policies.
As at March 2017, the number of legitimate invoices paid after 30 days among national departments was 17 113, valued at R1.3-billion. During March 2016, the number of invoices paid after 30 days was 14 741, valued at R503-million. This shows a year-on-year increase in the number of invoices and values.
At provincial level, as at March 2017, the total number of invoices paid after 30 days was 15 754, valued at R1.1-billion. In March 2016, the number of invoices paid after 30 days by provincial departments was 33 776, valued at R4.2-billion. This indicates a substantial decrease in the number of invoices, as well as the value.
Generally, there are challenges; however, unpaid invoices are concentrated in a few departments. Thus, a few pockets of excellence with good practice in relation to the payment of suppliers do exist.
Earlier this year, AHI president Bernard Swanepoel initiated a campaign targeting big businesses and government, challenging them to pay invoices on time.
“Nothing cripples cash flow for a small business more than late payments,” he said, noting that SMEs were the country’s best hope for job creation.
“Their inability to anticipate revenue means not only that businesses are not hiring but also that they are downsizing and, sadly, some have to close their doors.”
In some instances, businesses are moving to technology or mechanisation to replace what could be labour-intensive small industries, Swanepoel added.