Late-paying Government departments named & shamed

Small Business News

Government departments are failing to pay their small business suppliers within ten days despite a commitment from the Prime Minister to do so, research from the Institute of Directors (IoD) has revealed.

Based on information gathered under the Freedom of Information Act, the IoD has found that only two departments – the Home Office and the Welsh Office - are meeting the Prime Minister’s October 2008 pledge to ensure ten-day payments to small and medium-sized enterprises.

The research found that the Cabinet Office only pays its business suppliers within ten days for 61% of payments and the Department for Transport for just 65% of payments.

“Paying suppliers promptly is critical in helping small firms maintain their cashflow and survive in the current economic climate,”

said a spokesman for the Department for Business, Innovation and Skills (BIS).

“That’s why the Government has taken action – the latest figures show that in May central Government departments in fact paid nine out of ten of their bills within ten days and performance has steadily improved since November.

“However, we will continue to work across Government and with businesses to promote the Prompt Payment Code and to encourage 100% of bills to be paid on time.”

However, IoD director general, Miles Templeman said that progress had been too slow.

“The Government must now press departments harder than ever to deliver on the ten day target and to communicate progress by making information available via departmental websites.”

“The importance of small businesses getting paid on time should not be underestimated. Smaller firms feel the impact of late payment on their cashflow much more acutely than larger businesses, and late payments can be the difference between survival and extinction in the current economic climate.”

For more information about the Prompt Payment Code and to see an up-to-date list of signatories, visit www.promptpaymentcode.org.uk