The official opposition, the Democratic Alliance (DA), has accused the Gauteng provincial government of playing the blame game by arguing that a computer system is stopping it from being able to pay all invoices within the legally-mandated 30-day period.
However, the province has hit back, saying the SAP system it uses to pay suppliers is able to handle invoice payments.
According to National Treasury regulations, issued under the Public Finance Management Act, unless determined otherwise by a contract or other agreement, all payments due to creditors must be settled within 30 days from receipt of an invoice, or in the case of civil claims, from the date of settlement of the court judgment.
Yet, this is not currently the case, and the province is taking on average a month-and-a-half to pay billions owed to suppliers, many of which are small businesses that cannot absorb the strain on cash flows.
Suppliers wait
Member of the provincial legislature and DA finance spokesperson, Mike Moriarty, says while there has been a gradual improvement in payments, the average time still falls outside of the legal requirements.
Moriarty adds there are some instances in which many months elapse before a payment is made. He notes that suppliers to the Department of Health, which make up the bulk of the invoices, still wait longer than three months before getting paid.
"A supplier to the social development department had to wait 1 794 days before being paid. There was a supplier to the Department of Education that waited 1 555 days, and one to the health department who waited 1 553 days."
Moriarty says provincial government is bound by the rules of Generally Recognised Accounting Principles, which require the province to account for the payment of goods and services from the moment these have been received.
Obscuring facts
Up until now, the provincial government has avoided this obligation by claiming its computer system cannot accommodate this provision, argues Moriarty. "So, by obscuring these facts, the province is ignoring the plight of suppliers, some of whom have had to wait over four years for payment."
Moriarty says, although the amount of money involved is difficult to quantify, at least R200 million worth of daily sales are affected. He explains that the health department spends around R2 billion a month and accounts for the vast majority of transactions, and is the worst offender when it comes to late payments.
Of the 22 000 invoices submitted for payment each month, some 18 000 go to the health department, says Moriarty. He says health is paying out in two-and-a-half months, while the Gauteng average is a month shorter than that.
However, Moriarty argues that software will not fix the problem as it is caused by people not processing invoices when they should. He says this is a "blame game".
Moriarty adds that the province should move to cloud-based software that will allow suppliers to track their invoices. He adds that invoices get lost in the system and suppliers complain that the payment rate is not what the government claims it is.
Not so
Sithembiso Ndlovu, acting director of strategy, media and liaison at the Gauteng Department of Finance, says the SAP system that is used to pay suppliers can accommodate accounting for the payment of goods and services from the moment these have been received.
The process is that invoices are submitted on delivery, and attached to a form, which is then sent to the finance department to be captured and payment is then made 30 days from the invoice, says Ndlovu.
"Secondly, at no stage have we indicated that this obligation is being avoided by the province. Note that the province will continue to ensure that suppliers are paid within the stipulated timeframe.
"In fact, some departments have shown a remarkable improvement in this regard over the past few months," says Ndlovu. He adds that there was an incident about a week ago when suppliers were told via the call centre that the system was down for three days due to routine maintenance.
SAP was not immediately able to comment on the software specifications.
Share
