Tuesday, 18 September 2012 15:47

Local Authority Late Payments Continue

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Local authority late payments are almost as much of a problem now as when, in 2008, the government first introduced a ten-day target for settling its invoices in the regions, reports the Forum of Private Business.

The FPB has long been focusing its attention on local authorities, and we reported in June that the FPB had submitted Freedom of Information requests to help sketch out a picture of how things have changed under the ten-day target window.

Sadly, the findings don't make for particularly positive reading, especially if you work with local authorities on many of your projects.

A Game of Two Halves

The FPB found that local authorities' suppliers can expect to be paid within ten days roughly half the time - 51% of invoices covered by its FOI requests were settled on time in the 2011-12 financial year.

This is a six percentage point increase since 2009, and has also taken the overall average time to receive payment from 17.9 days to 17.5. date

Phil Orford, chief executive of the FPB, has understandably slated late-paying local authorities for failing to do more to reach their ten-day targets.

He says: "Very few councils are coming even close to this target, and that's disappointing. 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."

Keep the Cash Flowing

We always say that you have every right to pursue payment when it's overdue - and to make reasonable checks to ensure your invoice has been received and is being processed, even if the deadline hasn't yet arrived.

Local authorities have their budgets too, but realistically, nobody's going to let your local council go bust, and those funds are better off in the accounts of small businesses, helping them to support the local economy.

With a 'postcode lottery' still very much in evidence in the FPB's report, businesses in Yorkshire face late payments most often, while Worcestershire County Council takes a massive 65 days to pay on average.

If you're in one of these worst-affected areas, putting rigorous credit control procedures in place is simply a way to protect your cashflow against these outrageous delays from your local authority.

The Foundations of Growth

Mr Orford says of the findings:

"While many councils like to boast that they understand the need to pay suppliers quickly, clearly they don't."

Suppliers who are able to take the initiative and pursue councils for prompt payment can help to take the authorities' desire to pay out of the equation; invoice deadlines are a matter of fact, not opinion.

Getting the money into your business account on time is your legal right, and you should not allow any customer to use their size or complexity to intimidate you - even if they are a branch of local government.

And as you reinvest those funds into your business, you help to underpin economic growth for the future, an ambition that should surely be shared by small businesses and government alike.

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Image from flickr user Oliver Symens is licensed under CC BY 2.0