A new initiative, the Government Suppliers Action Group (GSACG) was launched to support suppliers to government with outstanding payments on invoices, which have not been paid within the prescribed 30-day payment rule.
According to Gerrit Davids, Lead Consultant at specialist tendering agency, TaranisCo Advisory, National Treasury has a policy around payments, which are not processed within 30-days and it is generally not applied by organs of state for various reasons of, which a lack of funds is the most common one found within these entities.
Earlier this year, President Cyril Ramaphosa in his reply to the debate on the State of the Nation Address (SONA) confirmed the seriousness of the problem when he said, “The frustration that these entrepreneurs have to endure at the hands of the very state that is supposed to assist them is a matter of great concern.”
“It is clear that the failure of some government departments to pay suppliers within 30 days has a devastating impact on small and medium-sized businesses.”
“This is something that I want to see addressed as I visit government departments, because the culture of late payment has gone on for far too long and has caused far too much damage, particularly to emerging black businesses.”
Davids encourages suppliers not to fear victimisation at the hand of government officials when requesting outstanding payments, since they are protected under the 30-day payment rule.
Davids says. “I know of one company who is owed close to R100m by various departments and they are afraid to damage long-standing relationships, should they demand payment of these outstanding invoices.”
“For that reason, we have now decided to launch the GSAG to assist suppliers at no cost to complete the required form and to lodge it with National Treasury, who in turn will pursue those organs of state failing to pay suppliers.”
“We are also researching the possibility of a class-action suit, should the law and in particular the Constitution allow for it, since on their own, it could be too costly for suppliers to litigate against the State for outstanding payments.”
Davids says, “It was recently reported in parliament that a large number of municipalities did not meet their expenditure requirements and 60 percent of district municipalities are dysfunctional.”
Finance Minister, Mr Tito Mboweni also said in parliament, “This year, 113 municipalities adopted unfunded budgets, up from 83 in the previous year. Municipalities owe more than R23 billion to service providers."
Davids says, “It is clear that we are dealing with a dysfunctional payment system and it has a massive impact on the sustainability of small businesses of, which his company is also a victim of such late payments since a local municipality has not paid it since June this year.”