The Small Business Institute (SBI) has called on the government to ’slay the monster’ of late payments to small and medium enterprise (SME) suppliers. Photographer: Waldo Swiegers/Bloomberg
The Small Business Institute (SBI) has called on the government to ’slay the monster’ of late payments to small and medium enterprise (SME) suppliers. Photographer: Waldo Swiegers/Bloomberg

Small business calls upon state to ‘slay the monster’ of late supplier payments

By Given Majola Time of article published Aug 16, 2021

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THE SMALL Business Institute (SBI) has described the government’s attempts to ensure that suppliers were paid within 30 days as small but encouraging, but called on the government to sanction departments and officials who failed to comply with the policy and “slay the monster” of late payments to small and medium enterprise (SME) suppliers.

This followed the National Treasury’s release last week of an annual report on non-compliance with the payment of suppliers’ invoices within 30 days.

The report showed that national departments achieved an annual average timeous submission rate of 73 percent during the 2020/21 financial year. This represented a regression compared to the annual average timeous submission rate of 85 percent in the 2019/20 financial year.

The issue of late payments has been contentious for many years, and with the economy in the doldrums, the Covid-19 wrecking ball and the recent unrest in KwaZulu-Natal and Gauteng, the difference between being paid late or on time impacts a company’s cash flow and survival.

According to the report, there was an improvement in the number of invoices paid after 30 days and the number of invoices older than 30 days and not paid when comparing the 2020/21 financial year to the 2019/20 financial year amid the restrictions posed because of the pandemic. These numbers, however, remained very high at a provincial level.

SBI chief executive John Dludlu said on Friday that they welcomed the continued focus by the National Treasury to monitor the compliance by state departments with the government’s 30-day payment policy.

“However, we continue to be gravely concerned that there is lack of consequence management by officials and departments and state agencies that violate this policy,” said Dludlu.

He said it was also concerning that non-compliance, particularly at provincial level, continued when SMEs were locked down.

Dludlu said they were also very disappointed that the government was not part of last year’s #PaySMEsOnTime, a private sector-led initiative, which was supported by more than 50 large corporates, including Remgro, Anglo American, Telkom, Exxaro, Naspers and Sanlam.

The SBI said given that the pandemic still engulfed the country, the organisation urged the government to step up efforts to have state departments, agencies and state-owned enterprises pay SME suppliers within 30 days or less. The institute also called on the government to sanction departments and officials who failed to comply.

“We need to slay the monster of late payments to SME suppliers. Now is a good time to do this if we are serious about getting SMEs to contribute 90 percent of jobs by 2030,” said Dludlu.

The National Treasury said last week that in the 2020/21 financial year it established a centralised 30 days’ queries email ([email protected] treasury.gov.za) where suppliers could log their non-payment queries with the National Treasury.

The department said evidence of payment was crucial to ensure that the process was complete and closed in monitoring the progress of payment of supplier’s invoices within the prescribed period.

The National Treasury said it issued Instruction Note Number 34 that required departments to submit 30 days’ exception reports to the relevant treasuries by the seventh day of each month with information in respect of the preceding month.

Instruction Note 34 required departments to implement manual or electronic systems that would enable departments to track invoices.

SMEs have been fighting late payments for a while.

In May, KZN Human Settlements and Public Works Department’s MEC Ntuthuko Sibiya warned that fed up service providers had threatened to take legal action against the department if the situation did not improve.

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