Tuesday 11th September, 2012

The Forum of Private Business has found councils struggling to meet payment terms targets. Despite government imposed targets for councils to pay suppliers within 10 days, on average barely half (51%) of councils actually do.  Although it's an improvement on the 45% figure in 2009, it's not the move forward the government was hoping for. The data also reveals suppliers are now paid, on average, after 17.5 days – a fractional improvement from 2009 when it was 17.9.

It also appears that there's a large discrepancy between different areas of the country. On the whole, councils in the North West were the quickest payers, while those in Yorkshire were the worst.

"Despite all the pressure from Central Government for public bodies to settle bills in less than 10 days, very few councils are coming even close to this target, and that's disappointing," said Forum's Chief Executive, Phil Orford.

"In the space of three years we have seen an average improvement of less than half a day in the time it takes local authorities to pay their dues. This again is poor.

While the research highlights problems with prompt payment right across the country, there were some good news stories. The figures show a number of councils paying extremely high percentages of their invoices in under 10 days. Tonbridge and Malling were the best performing for this indicator at 97.1%, with South Northamptonshire second on 96.1%, and Waverley third on 94.2%.

Added Mr Orford: "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.

"In a full three years, with the economy bouncing along the bottom the whole time, payment times have improved by an underwhelming 0.4 days on average. That's just not good enough, and really those councils who average longer than 30 days need to re-evaluate their payment systems from the top down. And there are many."

He added: "Late payment is a curse for many small firms, and if local councils can't get it right with all the resources at their disposal, then the private sector will always have an excuse for not doing so either.