The government's non-compliance in paying suppliers within 30 days has reached alarming levels, President Jacob Zuma said on Tuesday.
"A key contribution to the development of small business by government would be improving government's ability to pay suppliers on time, within the prescribed 30-day period," Zuma said.
"We know that this has been a serious challenge to business over a long period of time. Given that non-compliance with the 30-day payment period had reached alarming levels, we decided to have this addressed at the highest levels of government."
Zuma was speaking at the Soweto International Conference on Entrepreneurship and Small Business Development, at the University of Johannesburg's Soweto campus.
Zuma said the National Treasury issued an instruction on November 30 last year, directing national and provincial departments to report non-compliance and reasons for this to Treasury.
"The outcome demonstrates that we had reason to be concerned," Zuma told the conference.
For March 2012, 27 national departments and six provincial treasuries, that cover 72 provincial departments, submitted their reports.
According to the report the current number of unpaid invoices older than 30 days in national departments was remarkably high at over 2438, Zuma said.
"The amounts are in excess of R88 million."
In provincial departments there were 11,370 invoices outstanding, amounting to over R548 million.
"When all the departments submit exception reports the figures are likely to grow substantially," Zuma added.
"Most of the reasons provided relate to internal management problems in departments. Some of the reasons are shocking, such as that the officials responsible for processing the accounts went on leave."
Zuma said the Forum of SA Directors General was directed to work with its members to ensure a reduction in the number and value of unpaid invoices.
"It is unacceptable that departments can be so relaxed about something that can destroy some small businesses if not attended to urgently," he said.
Cabinet would get regular reports to monitor progress in the campaign, he said.