06 November 2009
Source: LocalGov.co.uk ()

Councils' late payments risk small businesses


Arun Marsh

Small businesses are at risk of going bust because of late paying councils, a new study has found.

A Freedom of Information investigation by the Forum of Private Business (FPB) has revealed vast inconsistencies in the amount of time British councils take to pay their suppliers.

The research comes a year after the Government urged town halls to settle invoices within 10 days to help smaller businesses maintain cash flows during the recession.
 
The better authorities are settling more than 90% of their bills in ten days or less and made concerted efforts to speed up payments to aid local companies.
 
 However other councils ‘appear oblivious’ to the 10-day target says the FPB.

The worst offenders admitted none of their suppliers received payment within 10 days and on average authorities took almost twice the recommendation, at 19 days.

Overall less than half of payments were made within the 10 day mark 42%, but stark regional variations meant that this figure was as high as 52% in some areas and as low as 11% in others.
 
FPB chairman, Noel Guilford, said that work from local authorities was a lifeline for small businesses and they couldn’t afford to be part of a ‘postcode lottery’ when waiting for cash.

‘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.
 
He added however: ‘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.’
 
The FPB’s research found that:
  • The average length of time for a UK council to settle an invoice was 19.4 days, ranging from 18 days in England to 37.2 in Northern Ireland.
  • 52% of bills were settled within 10 days in West Midlands but just 11% were paid within the timeframe in Northern Ireland. 
  • The council which paid the most of its bills within 10 days was South Northamptonshire Council, on 91%. The authority also managed to settle invoices in an average of less than six days.
  • The two councils which said 0% of payments were made within 10 days were Argyll and Bute in Scotland and Down District Council in Northern Ireland.
  • Wakefield District Council in Yorkshire only managed to pay 1% of invoices within 10 days.

Additionally, many small district councils reported much better payment performance than their larger, city-based counterparts.

 
Leeds City Council only managed to pay 13% of its bills within 10 days, but the semi-rural Pendle Borough Council in Lancashire managed a figure of 87% and also signed up to the Prompt Payment Code.
 



Your comments

There are currently no comments, be the first!



 Back     Top of page