William Eichler 24 April 2017

Councils making ‘glacial’ progress in improving payment times

Councils making ‘glacial’ progress in improving payment times image

Progress in the time taken for local councils to pay suppliers has been ‘glacial’, falling just one day since 2009, study finds.

New research by the Asset Based Finance Association (ABFA) has revealed the payment times to suppliers by local councils have remained persistently high in the past year, with the national average dropping just 1% from 16.53 days in 2014/15 to 16.35 days in 2015/16.

The ABFA has found that both Peterborough and East Renfrewshire, the slowest paying councils, take on average 38 days to pay suppliers, while Richmond upon Thames takes an average of 36 days.

Jeff Longhurst, chief executive of the ABFA, warned late payment can be very damaging for small and medium-sized businesses (SMEs).

‘Many SME contractors and suppliers are vulnerable to damage in their cashflow, as local councils lag behind on their payments,’ said Mr Longhurst.

‘Some progress has been made but public sector organisations should be acting as examples for the private sector to follow.

‘Central Government has procedures in place to try to ensure prompt payment to their suppliers - who are often larger companies - but local councils are still dragging their feet.

‘SME subcontractors are often hit twice by late payments – both from the local council, and the main contractor. As the last link in the chain, they can end up waiting for months for payment.’

‘Progress in the time taken for local councils to pay their contractors and suppliers has been glacial, falling just one day since 2009,’ he added.

‘Local authorities should be making sure they look after SME contractors at every step of the process, and should be looking to improve payment times at a faster rate.’

For more on this read our feature, 'Are councils paying promptly?'

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