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Public sector still taking too long to pay suppliers

Paul Kunert

Resellers are facing a "payment postcode lottery" in the public sector with some local councils settling invoices quickly and others taking more than 30 days, a study by the Forum for Private Business has found.

This comes more than a year after Lord Mandelson urged Regional Development Agencies and other departments to pay bills within 10 days to ease recessionary cash flow woes.

Noel Guilford, FPB National Chairman, said there needed to be more consistency in the processing of payments as some councils were "oblivious" to the Government's calls.

"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," said Guilford.

The report found 42% of councils on average were meeting the 10 days target, this rose to 52% in some areas but was as low as 11% in others, with "many councils" struggling to pay invoices even within 30 days.

"We're part of a national economy, we're in a national recession and you would expect a national policy on payment by public bodies. Cash flow is the biggest concern for many smaller firms," Guilford added.

Not wanting to alienate local councils, the FPB said they were relatively good payers compared to the private sector but wanted some joined-up thinking from central Government to address the issue.

Simon Harbridge, group finance director at Stone Computers, said many public sector departments were trying to improve their payments terms but "generally our experience reflects the trends in the research".

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