State to police payments to its suppliers

Government heads of department and accounting officers will from now on have to sign agreements that will ensure suppliers are paid within 30 days as the state cracks down on late payments crippling businesses. In addition, a new system to track payments has been installed in 90 percent of departments. This means the government will be able to assess which “excuses” for late payments are legitimate, Minister in the Presidency for Performance Monitoring and Evaluation Collins Chabane told journalists during a post-cabinet briefing on Thursday. However, the Presidency itself has failed to stick to the 30-day rule, it emerged this week.

The Public Finance Management Act (PFMA) requires all government departments to make payments within 30 days for all services rendered, unless reasons can be provided for the delay. Chabane said the introduction of the 30-day clause into the performance contracts of accounting officers and heads of department would ensure “there is no speculation” as to whether someone had performed or not. “You will not be able to argue it,” said Chabane. He said the new system that had been installed would be able to track the invoices of all government departments and monitor payment trends. This meant accountability would be improved across all departments.

“You know we are people, we will always find a reason as to why we are not paying,” Chabane said, referring to the option under the PFMA to provide a reason for late payment. While it was illegal not to pay within 30 days, many departments simply provided a reason for not doing so. The new system would enable the government to monitor which “are the genuine cases where payments could not be made”, Chabane said. It was not yet fully functional, as some departments were still in the process of data capturing. The process was being slowed down by irrelevant or incomplete data being captured, such as incomplete invoices. Chabane said it would be fully operational by next year.

But a written reply from Chabane to a parliamentary question from DA MP Stevens Mokgalapa, tabled this week, revealed that in July the Presidency had failed to pay more than R230 000 to eight service providers within 30 days. Chabane said payments had not been made due to the late submission of invoices by suppliers and, in some instances, the rejection of banking details provided by the National Treasury Safe Net System. The Department of Performance Monitoring and Evaluation in the Presidency had also made several payments after the 30-day deadline since January, which added up to more than R94 000, while late payments in December last year came to more than R1.94 million. Chabane said the primary reason for these late payments was “negligence by officials”.