Local authorities in England are paying more than 1.3m supplier invoices – valued at more than £5bn – late each year, according to a report.
The report, by payment claims company Delv, said as much as half of late payments were to SMEs.
Using Freedom of Information law, Delv obtained data from 184 local authorities that showed more than 600,000 invoices were paid late across 2018-19 and 2019-20. The company extrapolated this across all English local councils to arrive at the figure of 1.3m invoices per year.
“Local government are responsible for a significant proportion of the total value of invoices paid late in the UK,” said the report.
“We estimate between 8% and 10% of their invoices are paid late.”
The report said 84% of councils were unable to identify SME suppliers and accurately report payment performance to them, but where such performance was reported, almost half of late payments were to SMEs. This represented 22% of the total value of late payments.
“Payment performance deteriorated at almost half the authorities studied across two years,” said the report.
Delv said 71% of respondents had paid not late payment compensation across the two-year period, despite suppliers being allowed under law to claim it.
“We estimate local authorities accrued liability for compensation of at least £160m over the two years,” said the report.
“Currently very few suppliers claim compensation due to ignorance of the legislation or how much they might be owed. In many cases it is through a fear of damaging relationships with their customers and any repercussions regarding future business.”
Andrew Williamson, director at Delv, said: “Many authorities have policies in place to pay their smaller suppliers promptly, however the evidence shows they simply don’t deliver on this.
“Late payment is not acceptable in normal times, let alone with the pressures added by Covid. Few key decision makers in local government appear to appreciate the impact (both financially and emotionally) that late payment has on small businesses. This needs to improve and they need to accept their liability to compensate their suppliers when they get it wrong.”
In March Liz Barclay was appointed new UK small business commissioner to “spearhead the national effort to crack down on delayed invoices”.
The Ministry for Housing, Communities and Local Government has been asked for comment.
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