Umvoti cash-flow problems a concern

2015-10-07 06:00

THERE is considerable concern regarding the cash flow of Umvoti Municipality.

In a high-level comprehensive report presented to a Council meeting last Friday, acting CFO, Sphindile­ Ngiba, said that all department heads were revising their procurement plans to be in line with the available resources in terms of cash-flow restraints.

Although the operating revenue­ from beginning of July to 21 September showed a favourable­ variance, Mrs Ngiba­ said the recent change of the financial system had resulted in interference with billing, impacting directly on the collection of property rates and electricity revenue.

Debtors’ balance was over R31 million, due to the increased rates and electricity tariffs as well as financially constrained consumers.

The acting CFO said that more stringent debt collection and credit control processes should be considered.

In addition the first quarter (up until 21 September) saw an “uncommon upsurge” in operational­ expenditure due to an electrification programme and the procurement of plant and equipment prior to the receipt of the front- loading loan from the Development Bank.

This has placed, and will continue­ to do so, enormous pressure on the cash flow and operational stability for at least the next three months.

She says “until such time as the situation has been normalised­ extreme caution ought to be exercised in all our operational expenditure”.

Cost-cutting measures initiated­ include limit on expenditure on frequent travel, overtime and accommodation costs.

A cash-flow monitoring committee of officials has been established to monitor expenditure requests.

This means temporary constraints on operations and activities until the cash flow improves.

The report showed that general expenses expenditure was the highest, followed by employee-related costs.

Obviously everyone is extremely concerned but at least with the appointment of Ngiba­ as acting CFO the actual facts of the serious situation are being made known, positive counter-action is being taken and she has already made it clear in her short time at the Municipality that cover-ups and lies to the public are a big “no-no”

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