2021/22 annual report on non-compliance with payment of suppliers’ invoices within 30 days

National Treasury has released an annual report on non-compliance with payment of suppliers’ invoices within 30 days today.

The report shows that there was an improvement in the payment of invoices by government to service providers within 30 days in the 2021/22 financial year.

The number of invoices paid after 30 days by national and provincial departments in the 2021/2022 financial year amounted to 401 691 invoices with the Rand value of R 33.7 billion.

The number of invoices older than 30 days and not paid by national and provincial departments at the end of March 2022 amounted to 67 862 with the Rand value of R 6.1 billion.

There was a 63% improvement in the number of invoices older than 30 days and not paid at the end of the 2021/2022 financial year, which amounted to 134 invoices to the Rand value of R 5 million when compared to 358 invoices to the Rand value of R426 million reported at the end of the 2020/2021 financial year.

There was, however, a noticeable regression in the number of invoices paid after 30 days by national department and a regression in the number of invoices older than 30 days.

Recommendations for improvement:

• Payment of invoices within 30 days be included in the performance agreements of accounting officers, chief financial officers and other officials working in this area;

• Disciplinary actions 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;

• Accounting officers take steps to ensure that the information to be submitted to the relevant treasury is duly signed off and submitted to the relevant treasury as per the timeframes stipulated in the National Treasury Instruction Note number 34;

• Accounting officers and chief financial officers to address the root causes of the late and/or non-payment of invoices to improve compliance with the requirement of Treasury Regulation 8.2.3;

• Payment of suppliers within 30 days be a standing agenda item for discussion at every EXCO meeting of Departments; and

• Accounting officers to consider recommendations provided to improve the level of compliance with the requirement to pay supplier’s invoices within 30 days.

The purpose of this annual report is to keep the relevant stakeholders abreast of non-compliance with the legislative requirements to pay supplier’s invoices within 30 days and provides a trends analysis of what transpired in the 2021/2022 financial year when comparing with previous financial year analysis.

The annual report also provides common reasons recorded by departments for late and/or non-payment of invoices and the continuous efforts taken by the National Treasury to improve compliance with the requirements to pay invoices within 30 days.

The National Treasury Instruction Number 34 issued in 2011, requires departments to submit 30 days exception reports to the relevant treasuries by the 7th day of each month, with details of the number and Rand value of invoices paid after 30 days from the date of receiving invoices, the number and Rand value of invoices that are older than 30 days which remained unpaid, and the reasons for the late and/or non-payment of these invoices.

The late and/or non-payment of supplier’s invoices have a negative impact on socio and economic challenges that our country is facing.

To ensure that supplier operations continue without strain and financial difficulties, government institutions are urged to pay their suppliers on time and not contribute to the dire effects of the pandemic that has already put a strain on the financial sustainability of SMMEs.

The National Treasury continues to monitor the level of compliance with the requirement to pay supplier’s invoices within the prescribed period in terms of section 38(1)(f) of the Public Finance Management Act (PFMA), 1999 (Act No. 1 of 1999) and Treasury Regulation 8.2.3.

More in-depth information may be sourced from the published report on the National Treasury website www.treasury.gov.za.

Source: Government of South Africa