Suppliers and contractors owed money for goods and services are being forced to rethink how they pursue unpaid Government contracts after Treasury warned that businesses using private agents to recover their money will have to bear the costs themselves.
The warning comes as some businesses have been turning to consultancy firms and other intermediaries to pursue outstanding payments, with such agents reportedly demanding fees or a percentage of the money recovered.
Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said businesses should deal directly with the Ministries, Departments and Agencies that contracted them instead of paying third parties to pursue their money.
“Government creditors who choose to engage such entities do so at their own risk and should not expect Government to recognise or settle any resulting fees, commissions or other associated costs,” Ncube said.
The directive creates an additional financial risk for suppliers already waiting for payment, as businesses that hire recovery agents could end up paying commissions without those costs being recognised as part of the debt.
Prof Ncube said no consultancy firm, agent or other third party had the authority to facilitate, guarantee or secure payment of money owed by Government.
Related Stories
“The business community is further advised that no consultancy firm, agent or other third party has the authority or mandate to facilitate, guarantee or secure payment of funds owed by Government,” he said.
Suppliers and contractors have instead been directed to follow up on outstanding payments through the respective entities that awarded their contracts.
Treasury has also warned businesses against approaching Treasury officials directly over payment claims, saying such follow-ups must remain within established Government procedures.
The warning extends to holders of Treasury Bills, who have also been advised against engaging third parties to pursue matured payments or liquidation.
For businesses already operating under tight cash-flow conditions, the directive places greater emphasis on using official payment channels while leaving creditors exposed to any costs incurred through private debt-recovery arrangements.
Prof Ncube said Treasury would not consider requests to discount Treasury Bills, arguing that their maturity profiles had been structured in line with Government cash flows.
“Furthermore, Treasury will not consider any requests for discounting of Treasury bills as their maturity profiles were set strictly in line with Government cashflows,” he said.
Leave Comments