Councils vary on business payment times

Using the Freedom of Information (FoI) Act, the FPB asked local authorities across the UK how quickly they pay firms providing them with goods and services. 

The research was timed to come a year after the Government urged town halls to settle invoices within 10 days in order to help smaller businesses maintain their cash flows during the recession. 

However, the FPB found massive variations in payment practices across local government. 

Some trailblazing authorities are settling more than 90% of their bills in ten days or less. Others have proactively signed up to the Government’s Prompt Payment Code and made concerted efforts to speed up payments to aid local companies. 

However, other councils appear oblivious to the 10-day target. Some admitted that none of their suppliers received payment within 10 days, while more than a dozen paid less than a tenth of their bills within the timeframe. 

Additionally, many councils appear to have trouble paying invoices within even 30 days, only managing to settle around half of their bills within a month. 

Overall, the average time local authorities take to pay invoices was almost double the 10-day target, at 19 days.

FPB member Dr Alan Woods, of Alan Woods Associates Ltd, Cambridge, has worked extensively for a number of public bodies. 

He said: “The local authorities that are failing to pay promptly should learn from those that are doing so and put in place the right policies and procedures to ensure that small businesses get their payments without delay.

“Some public bodies are now committing to paying in 10 days and the rest should follow them. Further, if they can pay promptly during a recession, why can’t they do it all the time?”

The FPB’s research found that:
 
•The average length of time for a UK council to settle an invoice was 19.4 days, ranging from 18 days in England to 37.2 in Northern Ireland.
•52 per cent of bills were settled within 10 days in West Midlands but just 11 per cent were paid within the timeframe in Northern Ireland.
•The council which paid the most of its bills within 10 days was South Northamptonshire Council, on 91 per cent. The authority also managed to settle invoices in an average of less than six days.
•The two councils which said 0 per cent of payments were made within 10 days were Argyll and Bute in Scotland and Down District Council in Northern Ireland. Wakefield District Council in Yorkshire only managed to pay 1 per cent of invoices within 10 days.
 
Additionally, many small district councils reported much better payment performance than their larger, city-based counterparts. 

Leeds City Council only managed to pay 13 per cent of its bills within 10 days but the semi-rural Pendle Borough Council in Lancashire managed a figure of 87 per cent and also signed up to the Prompt Payment Code.