The Government has failed to make good on its pledge to pay SME suppliers promptly and ease the pressure on recession hit working capital.
Research by credit reference agency Graydon UK showed that 98% of 320 small businesses surveyed are not being paid within the 10 day timeframe that Business Secretary Lord Mandelson committed to fifteen months ago.
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In fact around two thirds of respondents revealed they are waiting more than 30 days - the standard trade invoice payment period - before Government agencies, local or central Government departments settle their debts.
“The sentiment underlying the Government’s pledge to radically curtail payment periods in the public sector is laudable,” said Martin Williams, managing director at Graydon UK.
“But unfortunately it’s now apparent that Ministerial willpower hasn’t been enough to inject more speed into the machinery of the public sector,” he added.
The “impact of this failure” on businesses liquidity was difficult to ascertain but it was clear that the public sector needs to set a better example for the commercial sector by paying and collecting money more efficiently, said Williams.
The issue of late payments has crystallised in the recession and can be the difference between life and death for many businesses but after last summer it appeared that the situation was generally improving.
However, research released in November by the Forum for Private Business found firms were facing a “postcode lottery” when delivering work for local authorities as some paid bills within ten days and others took longer than a month.