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The Small Enterprise Development Agency’s (Seda) Public Sector SMME Payment Assistance Hotline has facilitated R300 million worth of late payments on behalf of SMMEs for services rendered to public sector institutions.  The Hotline was established in September 2009 with the objective to ensure that late payments (unpaid for more than 30 days after submission of invoice) are kept to a minimum and SMME’s liquidity is not negatively affected.

Seda CEO, Ms 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,” says Lupuwana.

Since its formation, the Hotline has taken up 7 109 late payment queries with public sector institutions on behalf of SMMEs and, of these, 5 155 have been successfully resolved resulting in payments worth R300 million to SMMEs.  But Lupuwana wants the Hotline to do better.  “Although we’ve successfully resolved over 70 percent 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,” Lupuwana points out.

In the two-and-a-half years the Hotline has been operational it has identified common challenges, faced by both SMMEs and public sector institutions, which lead to late payments.  Challenges faced by SMMEs include:

  • SMMEs are not informed of payment process requirements i.e., registering on the service provider database and information required for accounts system;
  • SMMEs are not always provided with official order numbers when they render services in emergency situations;
  • 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;
  • Departmental officials do not forward invoices to the correct divisions within the department; and
  • SMMEs are not informed when invoices are lost or misplaced. 

Public sector institutions often have to grapple with the following challenges, leading to delay in payments: 

  • The quality of work/goods that SMMEs render/deliver does not match the standard of work agreed upon or specified in accordance with the contract;
  • Unfinished work by SMMEs;
  • SMMEs continue to render services even though the contract has lapsed;
  • Invoices are misplaced or lost when departments or public sector institutions restructure;
  • SMMEs do not submit original tax invoices;
  • A lack of continuity of Government officials 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.

The Public Sector SMME Payment Assistance Hotline can be reached on 0860 7663 729 (0860 SMME PAY) or through its website at www.acall.co.za.

ISSUED BY: Seda - Small Enterprise Development Agency
MEDIA ENQUIRIES TO: Lindokuhle Nkomonde – Manager: Corporate Communications and Media Relations
E-MAIL: lnkomonde@seda.org.za
TEL: 012 441 1210
Date: Wednesday, 02 May 2012