Variations in amount of time British councils take to pay suppliers

5th November 2009, 2:51pm

A major study by the Forum of Private Business (FPB) has revealed vast differences in the amount of time British councils take to pay their suppliers.

Using the Freedom of Information (FoI) Act, the FPB asked local authorities across the UK how quickly they pay firms providing them with goods and services.

The research comes a year after the Government urged town halls to settle invoices within 10 days in order to help smaller businesses maintain their cash flows during the recession.

Some trailblazing authorities are settling more than 90% of their bills in ten days or less. Others have proactively signed up to the Government's Prompt Payment Code and made concerted efforts to speed up payments to aid local companies.

However, other councils appear oblivious to the 10-day target. Some admitted that none of their suppliers received payment within 10 days, while more than a dozen paid less than a tenth of their bills within the timeframe.

Additionally, many councils appear to have trouble paying invoices within even 30 days, only managing to settle around half of their bills within a month.

Overall, the average time local authorities take to pay invoices was almost double the 10-day target, at 19 days.

Commenting on the findings, the FPB's National Chairman, Noel Guilford, called for more consistency in the processing of payments: "While some local authorities took instant action in response to Lord Mandelson's calls for 10-day payment a year ago, this research appears to show that others are completely oblivious to it, even now.

"These figures reveal that businesses face a payment postcode lottery when carrying out local authority work. Some businesses are paid for their goods and services within a few hours but some have to wait more than a month before receiving the money owed to them – it all depends on which council they are working for and where they are in the country.

"To most business owners, this will seem quite ridiculous – we're part of a national economy, we're in a national recession and you would expect a national policy on payment by public bodies. Cash flow is the single biggest concern for many smaller firms and the quicker you pay the money owed to them, the less likely they are to go out of business, with the loss of both jobs and tax receipts."

However, Guilford pointed out that work from local authorities is a lifeline for many smaller firms and many councils are excellent payers.

He said: "It's important to emphasise that, while we're disappointed with the inconsistency of payment practices among local authorities, this isn't about 'council-bashing'.

"The vast majority of small firms doing business with local authorities can expect to be paid in a fraction of the time that they would when dealing with a typical big company. Generally speaking, Britain's councils pay their suppliers far more swiftly than their private sector counterparts, and we rightly applaud them for that.

"We would just like to see a little bit more joined-up thinking, perhaps from central government, in order to make sure that small firms on one side of the country aren't waiting twice as long for their bills to be paid as their counterparts on the other."

Click here to submit a comment!

Brian Carman

06 November 2009 at 1:56pm

It looks as though the FPB might have start adding local councils to their late payment Hall of Shame list - http://www.fpb.org/page/531/Late_payment__Hall_of_Shame_.htm

Have your say!

To comment on this article, simply enter your name and email and send us your views. Please note that your comment will appear publicly below this article once it has been processed. For enquiries please email info@costsectorcatering.co.uk.

Name

Email

Leave blank

Comment (max 800 characters)