When will your buyer actually pay?

Why this matters more than the interest rate

Treasury Regulation 8.2.3 requires a government department to pay a valid invoice within 30 days. Most contractors plan on that. The published record says otherwise.

In the quarter above, departments paid 112,442 invoices worth R10.0 billion only after the 30-day deadline had already passed. A further 95,399 invoices worth R12.4 billion were still sitting unpaid at the close of the quarter.

And it is overwhelmingly a provincial problem. Provinces accounted for 97% of the unpaid invoices. Limpopo reported none at all; the Western Cape reported 37. The Eastern Cape reported 46,583.

That is the gap tender finance exists to cover. Not because your business is weak, but because you are supplying a customer whose payment behaviour you cannot control and, until now, could not even look up.

How to use this

• Before you price a tender. If your buyer sits in a province with a heavy backlog, the cost of waiting belongs in your pricing, not in your overdraft.
• Before you commit to suppliers. Payment terms you agree with your supplier should assume the realistic date, not the contractual one.
• When you arrange funding. A funder will form its own view of your buyer. Walking in already knowing the record makes you a more credible applicant.

About these figures

They come from the National Treasury report Non-compliance with payment of supplier invoices, published quarterly under the Public Finance Management Act. The figures above cover national and provincial departments. We transcribe them as published and update them when Treasury does.

They describe departments, not any single contract. A department with a poor record may still pay your invoice on time, and a good record is no guarantee. Treat this as the odds, not a forecast.

National Treasury — PFMA compliance reporting