Government guilty in late payment of invoices

Late payment of invoicesThe Government has failed to deliver on its pledge to pay small businesses within ten days of invoicing, according to a new survey.

Last autumn, Prime Minister Gordon Brown pledged in Parliament that Whitehall would become one of the best customers small businesses could have by cutting its 30-day payment time to ten days.

Brown said the move would be “a small price for greatly increasing cashflow associated with £8 billion of contracts for SMEs”.

However, a survey carried out by credit reference agency Graydon UK in the first two weeks of March 2009, revealed that just 1% of small businesses supplying government departments were paid within ten days.

Instead it found that:

  • 39% of SMEs were paid within 10 to 30 days
  • 53% within 30 to 60 days
  • 7% had to wait more than 60 days to have their invoices honoured.

Forum of Private Business spokesman Phil McCabe said:

“The Government should be setting a better example, so that big businesses feel compelled to follow them.”

Responding to the criticism, a Department for Business, Enterprise and Regulatory Reform (Now BIS) spokeswoman said:

“The Government is committed to supporting businesses in the areas they tell us matter – in their cashflow and in their access to finance. That’s why central government departments have committed to paying their suppliers within ten days.

“We have also established a Prompt Payment Code to encourage better payment performance between businesses,” she added. “More than 100 companies and organisations have already signed up, with more joining daily as we work with business organisations to promote the importance of paying their suppliers on time.”

For further reading see the business advice article on late payment of invoices.

Government guilty in late payment of invoices

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