Vendors face payment 'postcode lottery'

9 November 2009

9 November 2009 | Allie Anderson

Suppliers face a "postcode lottery" when it comes to getting paid by UK councils, figures suggest.

The Forum of Private Business (FPB), which represents small businesses, asked local authorities in England, Wales, Scotland and Northern Ireland the average time it took for them to pay suppliers between 2008 and 2009. Of the 434 local authorities in the UK probed, 374 responded.

The average length of time for all councils to settle invoices was 19.4 days. This is despite a government recommendation that small businesses be paid within 10 days.

The figures ranged from an average of 18 days in England to 37.2 days in Northern Ireland. Across the UK, the average number of bills paid in 10 days was just 42 per cent.

There were also huge variations regionally. South Northamptonshire Council came out on top, paying 91 per cent of its bills on time and settling invoices in an average of six days. However, neither Argyll and Bute Council nor Down District Council managed to pay any bills within the target timeframe.

The FPB's research comes a year after business secretary Lord Mandelson set out the 10-day payment pledge, to help improve supplier cash flow during the recession (News, 30 October 2008).

Noel Guildford, national chairman of the FPB, said: "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.

"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."

Guildford, however, did go on to point out that while the study's findings are disappointing, smaller suppliers are receiving payment from councils more quickly than from big companies.

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