SMEs face headache from late-paying local authorities

Invoice finance facilities such as factoring and invoice discounting can help cater with late payments

Business UK SMEs and small businesses continue to face issues with local authorities settling invoices late, according to the Forum of Private Business (FPB).

A recent survey of 500 firms by the Forum has indicated that almost three in four respondents considered late payments from the public sector to be either a ‘problem’ or a ‘serious problem’.

The FPB determined the average time taken to pay by local authorities was 19 days in 2009.

Although this is not a long time when taken in comparison to late payments from the private sector, which can see companies facing waits of 90 days for payment, it is still a long way above governmental targets for suppliers to be paid inside 10 days, which were implemented in 2008.

SMEs also face a postcode lottery, as some areas of the country see 52% of public sector bills settled on time, whilst others see 89% of invoices being settled late.

"The real public-sector late-payment problem is where local authorities are concerned, where a great many contracts for small firms originate," says FPB senior policy adviser Phil McCabe