Local councils fail to meet payment deadlines

Contractors wait more than 40 days for payment from some local councils, the Asset Based Finance Association (ABFA) has found.

The research reveals that council suppliers wait an average of 17 days to receive payment from councils.

In July 2010, local authorities were urged to follow the example of central government and pay 80% of invoices within 5 days.

However, some councils are failing to pay businesses within the 30-day payment deadline set out in the Late Payment of Commercial Debt Act. Some authorities are failing to pay for an average of 40 days.

The report found:

  • the average wait for payment from councils was 17.3 days in 2013/14
  • SME subcontractors with a turnover of under £1 million wait an average of 71 days to receive payment from councils.

Jeff Longhurst, chief executive of the ABFA, said:

"Public sector organisations should be acting as role models for the private sector in paying their invoices as promptly as possible.

"Central government bodies have performed well in hitting their prompt payment targets - many now pay more than 90% of their invoices within 5 days. The current average of 17 days for local councils leaves a lot of room for improvement.

"Those that fail to pay within 30 days risk damaging businesses in their local areas."