New payment data from National Treasury has revealed a worsening backlog of unpaid invoices across government departments, raising fresh concerns about the financial strain placed on small and medium-sized enterprises (SMEs) that supply goods and services to the public sector.
According to the latest figures, 95,399 invoices older than 30 days, valued at about R12.4 billion, remained unpaid by national and provincial government departments at the end of the second quarter of 2025. The number represents a 17 per cent increase from the 81,736 outstanding invoices recorded at the end of the first quarter.
The total value of overdue payments has also increased. Treasury data shows that the value of invoices older than 30 days rose from R11.7 billion in the first quarter to R12.4 billion by the end of the second quarter, reflecting a deterioration of about 6 per cent, or R663 million, within three months.
Analysts say the figures highlight growing concerns about payment delays within the public sector and their impact on small businesses that rely on timely payments to maintain operations.
Area Manager at Business Partners Limited, Lawrance Ramotala, said the implications of delayed payments go beyond administrative inefficiencies.
“Late payments are not just a cash-flow inconvenience for SMEs, they are a direct threat to business continuity,” Ramotala said. “Unlike large corporates, most small businesses do not have the balance sheets or reserves to absorb prolonged payment delays.”
He noted that the impact is particularly severe for businesses operating on tight margins, especially in sectors such as retail, manufacturing and services where steady cash flow is essential to daily operations.
“When payment cycles stretch beyond 30 days, it disrupts the entire operating rhythm of a small business,” he said. “That uncertainty makes planning almost impossible.”
Economists also warn that delayed payments can create ripple effects across supply chains. When SMEs are not paid on time, they may be forced to delay payments to their own suppliers, many of whom are also small businesses. This can trigger a chain reaction of late payments that weakens already fragile business ecosystems.
The consequences often extend to workers as well. Businesses struggling with delayed revenue may be forced to stagger or postpone salary payments, affecting employees who rely on regular income to meet household expenses such as rent, school fees, transport and groceries.
Over time, such disruptions can push families into debt, increase financial stress and reduce economic stability within communities.
Beyond immediate cash-flow challenges, persistent late payments also undermine the ability of SMEs to invest in expansion. Businesses facing unpredictable income streams are less likely to hire new staff, increase production capacity or invest in equipment and inventory.
Ramotala said that while South African small businesses have demonstrated resilience, continued delays in payments could have long-term implications for employment and economic growth.
“South Africa’s SMEs are resilient, but this resilience has limits,” he said. “When delayed payments become the norm rather than the exception, even well-run businesses are pushed into survival mode.”
In such circumstances, access to reliable cash-flow management tools and short-term financing solutions becomes increasingly important. Financing options linked to invoicing cycles can help businesses bridge payment gaps and maintain operations while awaiting settlement of outstanding invoices.
However, industry experts say financing alone cannot resolve the problem. Stronger enforcement of existing payment regulations and greater accountability for departments that delay payments remain critical to restoring confidence among SME suppliers.
Ramotala added that addressing late payments should be treated as an urgent priority given the role small businesses play in supporting employment and economic activity.
“As long as late payments persist at this scale, small businesses will continue to carry disproportionate risk,” he said. “Addressing the late payment crisis is critical to safeguarding the sustainability of the SME sector and the millions of jobs it supports.”
