Council slow payments putting jobs at risk

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Thousands of small business jobs are being put at risk because councils are failing to pay invoices within the Government imposed 10-day target. Despite orders from the Business Secretary, Lord Mandelson, four out of five local authorities are ignoring pleas to help firms by speeding up invoice payments.

Small business leaders warn that thousands of jobs are being put in danger as delayed payments stretch credit supplies of companies already struggling with the recession.

Critics said it provided “yet more evidence that the Government’s policies aren’t working”. Many councils described the 10-day target as an unrealistic expectation that would produce more red tape. Several, including Durham City, had not even heard of the request.

The 10-day deadline for settling bills was pledged by Lord Mandelson in October, when he announced councils would follow Whitehall’s lead in cutting payment times.

A survey of all 400 councils in England & Wales conducted by The Daily Telegraph found that more than 80% of respondents admitted they were not meeting the new 10-day target and a quarter of all respondents said they had no plans to meet the Government’s target.

The Federation of Small Businesses said small companies such as local builders, electricians and plumbers rely on £6.7bn of public sector work every year and estimated that, of the 32,000 small businesses expected to go into liquidation this year, 10% will do so because of late payments. “Businesses were over the moon when local authorities were urged to pay as quickly as possible,” said FSB national chairman John Wright. “now they are completely deflated by these worrying figures.”

Tip
If you supply goods or services to local authorities always pre-agree payment terms and know who to contact for payment!