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Many local authorities still causing late payment issues for businesses

September 10, 2012

The Forum of Private Business has conducted a nationwide study into the length of time local authorities take to settle invoices. Overall, the average payment time has barely improved over the past years – and the figures vary greatly across the UK.

According to the FPB study, only 51% of councils settled their invoices within 10 days (the timeframe laid down by the Government) – an improvement from the figure of 45% recorded in 2009.

However, the average time it takes supplier invoices to be paid is 17.5 days (down fractionally from the 17.9 days it took three years ago).

Postcode lottery for payments

How council suppliers are treated varies enormously according to where they area based.

Some councils pay a vast percentage of their invoices within the 10 day timeframe recommended by the Government; Tonbridge & Malling was the best performing (paying 97.1% of invoices within 10 days). South Northamptonshire and Waverley came second and third respectively.

In stark contrast, Ashfield District Council (in Nottinghamshire) paid a mere 0.9% of outstanding invoices within ten days, according to Freedom of Information requests submitted by the FPB.

A total of eight councils said that their average payment time exceeded 30 days – with one, Worcestershire County Council, taking an astonishing 65 days to settled invoices. Leicester took 28 days on average to pay their bills, and N.E. Lincolnshire and Hammersmith & Fulham received poor marks for promptness according to the survey data.

Businesses not “thrilled” by payment times

Chief Executive of the FPB, Phil Orford, said that the lack of improvement in payment times over the past three years was “poor”, and saw no reason why we should be “thrilled at such a small improvement”.

“We think the results show that while many councils like to boast that they understand the need to pay suppliers quickly, clearly they don’t. What’s more, it is self-evident many don’t appreciate the value of prompt payment to small firms. With some exceptions, local authorities are not making meaningful progress on speeding up their payment practices.