R300 million-worth of late payments, to small, medium and micro enterprises (SMMEs) for services rendered to public entities, have been facilitated through the Small Enterprise Development Agency's (Seda's) hotline.
The Public Sector SMME Payment Assistance Hotline, which can be reached on 0860 7663 729 (0860 SMME PAY) or through its Web site at www.acall.co.za, was established in September 2009 to ensure late payments (unpaid for more than 30 days after submission of invoices) are kept to a minimum and SMMEs' liquidity is not negatively affected.
Seda CEO Hlonela Lupuwana says the hotline has performed well and will continue to play a significant role in helping SMMEs stay afloat in the current trying economic conditions.
“Reports say around 440 000 small businesses have closed in the last five years and many of them would have closed because of cash-flow problems. Within this context, the role of the hotline becomes even more significant.”
Not enough
The agency says the hotline has taken up 7 109 late payment queries with public sector institutions on behalf of SMMEs since its formation. Of these, 5 155 have been successfully resolved, resulting in payments worth R300 million to SMMEs.
“Although we've successfully resolved over 70% of the queries brought to us by SMMEs, the number of unresolved cases is still too great.
“We're continually trying to find ways to overcome some of the challenges we come across in trying to facilitate late payments for SMMEs. We will not be satisfied until late payments are brought to an absolute minimum,” says Lupuwana.
Avoiding pitfalls
Common challenges, faced by both SMMEs and public sector institutions, which lead to late payments, have been identified, says Seda.
These include SMMEs not being informed of payment process requirements like registering on the service provider database.
SMMEs are also not always provided with official order numbers when they render services in emergency situations; there is sometimes only a verbal appointment of SMMEs to render services; government departments often request additional services to be provided on existing contracts without adhering to the proper contractual process such as issuing variation orders; and departmental officials do not forward invoices to the correct divisions within the department.
On the other hand, public sector institutions also often have to grapple with several issues that lead to a delay in payments. These include the quality of work/goods that SMMEs render/deliver not matching the standard of work agreed upon or specified in accordance with the contract; unfinished work by SMMEs; SMMEs continuing to render services even though the contract has lapsed; and invoices being misplaced or lost when departments or public sector institutions restructure.
Also, SMMEs do not submit original tax invoices; there is a lack of continuity of government officials that leads to confusion regarding the status of contracts; and SMMEs do not inform departments when company names or banking details change.
“Seda plans to intensify its education campaign to ensure that more SMMEs are made aware of the hotline and how to use it, as well as ensure that all parties are aware of the pitfalls that cause payment delays so they can avoid them,” says the agency.
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