Eastern Cape leads pack in late invoice payments

The Eastern Cape has emerged as the province with the most unpaid invoices older than 30 days, owing more than R5bn to businesses.

This is according to the National Treasury’s annual report, which puts the issue of late payments under the microscope.

According to the report, the province owes businesses a total of R5.1bn in outstanding payments.

Finance MEC Mlungisi Mvoko said the finding was not a good reflection on the Eastern Cape.

“I must first highlight that, on average, the province took 17 days to pay service providers as at the end of the 2024/2025 financial year in March.”

He said the report showed the challenge in paying creditors on time lay mainly with the health department, which owed R4.8bn of the R5.1bn total.

This was because the department had high accruals and payables, which negatively affected its ability to pay its creditors on time.

“These matters, however, continue to receive attention from the government through an integrated intervention.”

The intervention is aimed at turning around the department to enable it to function effectively in its various business operations and, critically, to be financially sustainable.

According to the report, there were 140,364 outstanding invoices countrywide older than 30 days that were not paid at the end of the 2024/2025 year, worth a combined R17.8bn.

“This represents a regression of 24%, or 26,883 invoices, when compared to the number of invoices older than 30 days and not paid at the end of March 2024. 

“Eastern Cape reported the highest number and rand value of invoices older than 30 days and not paid at the end of the 2024/2025 financial year, which amounted to 63,037 invoices, or 45%, of the total number of invoices older than 30 days and not paid by provincial departments to a rand value of R5.1bn.”

Common reasons provided by departments for late or nonpayment of invoices included inadequate budgets and “cash blocking”, financial system challenges, central supplier database challenges, high accruals from previous financial years and disputed invoices.

“The provinces of Gauteng, KwaZulu-Natal and Eastern Cape continue to be in the top three of provincial departments not paying suppliers timeously,” the report said.

Nafcoc Eastern Cape president Chwayita Zituta said the backlog in the payment of invoices had serious socioeconomic consequences, especially in underdeveloped and rural areas.

Zituta said this could have the effect of making suppliers reluctant to bid for tenders or deliver services.

“It affects trust, sustainability, employment and even service delivery.

“Small businesses struggle to pay their employees, suppliers and rent, which can lead to business closure, especially for start-ups and informal traders.

“Delays result in retrenchments, worsened by already high unemployment in the region.

“SMMEs take loans to cover gaps while waiting for payments, increasing financial strain.

“When SMMEs collapse or operate at reduced capacity, it hurts the broader township and rural economy.”

Zituta recommended that the provincial government establish an SMME payment task team.

The Herald