Late-paying councils 'cost firms'

Firms claims they face a 'postcode lottery' on which bills are paid on time

A business organisation claims that small and medium-sized firms are going to the wall because local authorities are failing to pay their bills on time.

The Forum of Private Business (FPB) says some councils are paying suppliers late on up to 30% of occasions.

The Welsh Assembly Government wants councils to pay bills in 30 days.

Figures seen by The Politics Show Wales show that no Welsh local authority has a 100% record of achieving that 30-day target.

Local Government Minister Brian Gibbons encourages payment within 10 days.

Phil McCabe from the FPB says the issue is "life or death" for small firms.

Mr McCabe said: "Our research consistently shows that late payment of invoices is the most significant problem for small firms.

"The impact of late payment is this: firms will close, they'll be forced to because they can't maintain cash flow, which is the lifeblood of business of any kind."

You have a firm in one part of Wales who is able to survive because they're getting paid on time and a similar firm elsewhere that has to close their doors simply because they're not getting their invoices paid Phil McCabe, Forum of Private Business

Of the 18 authorities who responded to the Freedom of Information requests, Monmouthshire was the worst performing, as 29% of the time it failed to pay bills within 30 days.

Swansea and Flintshire also fared poorly, with around 20% of payments missing the target.

The best performing authorities were Pembrokeshire and Bridgend, each hitting the target on 97% of occasions.

Swansea council said its performance was down to a transition to a new system of paying invoices.

"The result is considerably improved in 2009/10 and currently stands at 87% paid within the deadline and rising," a spokesperson said.

'Prompt payment'

Mr McCabe said the results showed that businesses were subject to a "postcode lottery", which was both unfair and unsustainable.

"You have a firm in one part of Wales who is able to survive because they're getting paid on time and a similar firm elsewhere that has to close their doors simply because they're not getting their invoices paid," he said.

"Late payment has always been a problem, now it's a matter of life and death for many firms."

But Rhondda funeral director Paul Williams said he was impressed by the speed in which he received payments from his local authority, Rhondda Cynon Taf.

We were concerned that there was an element of this as a gimmick when it was first announced... but actually our experience in the past year has been that from that original 45 days the average payment time is now around 20 to 25 days Bill Mayne, facilities management company MMS Group

"In all the years I've done the contract, I've always had a prompt payment. Once it's all been clarified payment is made within the working month," he said.

The issue of late payment emerged as a key theme in the assembly government's economic summits, held over the past year.

It is seen as a crucial way in which government and local government can help keep money in small businesses and therefore keep them afloat.

In January, Dr Gibbons restructured the way local authorities are funded to encourage them to pay bills to their suppliers within 10 days.

'Situation improved'

Rhondda Cynon Taf is the best performing authority in this area, paying 64% of bills within 10 days.

Flintshire is the worst performing, with only 13% of invoices settled within 10 days.

Bill Mayne, chief executive of facilities management company MMS Group, says the situation has improved since last year, where the average local authority payment to his company took around 45 days.

"We were concerned that there was an element of this as a gimmick when it was first announced," he said.

"But actually our experience in the past year has been that from that original 45 days the average payment time is now around 20 to 25 days and the very best are now paying within 10 to 15 days."

Mr McCabe said the FPB would not be happy until all invoices were paid within the 30-day target.

"[Local authorities] have come some way to setting the standard that the private sector should follow, but there's still a way to go," he said.

A Welsh Assembly Government spokesman said: "The assembly government has always encouraged local government to pay its bills in a timely manner.

"Encouraging faster supplier payments across the public sector is an important part of the Welsh Assembly Government response to the current economic climate."

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