Treasury report highlights government’s worst paying departments

In 2023/24 national and provincial departments failed to pay R35bn to suppliers within 30 days, as required by law. 

This represents a deterioration compared to the previous year, an annual report by the National Treasury shows. 

Legislation requires departments to pay suppliers within 30 days of receipt of an invoice. Nonpayment can have a severely negative effect on cash flows, especially for small companies. 

The annual report on noncompliance with this prescript released by the Treasury on Monday revealed the number of invoices paid after 30 days by national and provincial departments in the 2023/24 financial year amounted to 362,068 invoices with a total value of R35.1bn. This amount, though paid late, was settled during the 2023/24 financial year.

The Treasury’s analysis of the data indicated provincial departments were responsible for 70% of invoices paid after 30 days, and were also responsible for 99% of invoices older than 30 days and not paid at the end of March 2024.

A total of 253,151 invoices to the value of R30.5bn were paid after 30 days by provincial departments in the 2023/24 financial year. 

The number of unpaid invoices older than 30 days by national and provincial departments at the end of March 2024 numbered 114,908 with a value of R10.7bn. 

National departments recorded an improvement of R13m on invoices outstanding from the previous financial year end, while there was a regression of 24% in the number of unpaid invoices older than 30 days at the end of March 2024, numbering 1,427 invoices (R53m), compared to 1,149 invoices (R66m) reported at the end of March 2023.

The worst-performing department in terms of paying after 30 days was the department of defence with 84,934 invoices valued at R1,4bn, followed by agriculture, land reform & rural development with 1,164 invoices worth R1,37bn. 

Regression

Provincial departments recorded a regression of 53% in the number of unpaid invoices older than 30 days at the end of the 2023/24 financial year — a total of 113,481 invoices with a value of R10.6bn were unpaid, compared to 73,974 invoices with a value of R6.8bn reported at the end of March 2023. 

The worst province in terms of paying after 30 days was Gauteng with 85,331 invoices valued at R7,9bn. The Eastern Cape had 49,921 invoices valued at R5,8bn paid after 30 days and it also had the highest number of invoices older than 30 days and not paid at the end of 2023/24, at 73,449 invoices, valued at R4,5bn. 

The Treasury compiles annual reports on payment of suppliers to raise awareness on the nonpayment of suppliers’ invoices and to recommend ways to improve compliance with the law. 

“The late and/or nonpayment of suppliers’ 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. Timeous payment of suppliers is important for improving economic growth and reducing poverty, inequality and unemployment,” the Treasury said.  

The Treasury has recommended a number of improvements, including that the payment of suppliers within 30 days be a standing agenda item for discussion at every executive committee meeting of departments. It has also recommended disciplinary action be taken against officials who fail to comply with the requirements to pay invoices within 30 days and who undermine the systems of internal controls. 

ensorl@businesslive.co.za