Council improves payment of bills, but not fast enough for small business boss

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ALTHOUGH it has no legal obligation to do so, Scottish Borders Council should be trying to pay all its suppliers for goods and services within 10 days of receiving an invoice.

That is the view of Gordon Henderson, the former Melrose businessman who is now development manager with the Federation of Small Businesses (FSB) in the Borders.

His comments came despite figures which show that, in 2010/11, the Newtown-based local authority paid more than 91 per cent of its invoices within 30 calendar days of receiving them.

And although this is an improvement on the previous year when 87 per cent were settled within that statutory timescale, Mr Henderson believes more could be done to help local companies.

“The fact is that since 2008, the payment of invoices within 10 days has been a key plank of the Scottish Goverment’s economic recovery plan,” said Mr Henderson.

“I share the view of Aileen Campbell, the local government minister, that there is considerable scope for councils to pay up more quickly and follow the example of her government which is paying almost 98 per cent of invoices within 10 working days.”

The FSB, representing hundreds of small to medium-sized businesses in the region, is seeking to apply pressure to councils to pay their bills promptly after the responses to Freedom of Information requests by the Scottish Conservatives revealed that just 31 per cent of invoices were paid within the 10 days recommended by the Scottish Government.

All 32 local authorities were contacted by the party with SBC one of 13 which said they did not collect the required information.

The worst council for not paying promptly over the last four years was North Lanarkshire where the average for meeting bills within 10 days was less than six per cent. The best performing was Dundee at 72 per cent.

Tory economy spokesman Gavin Brown MSP observed: “Local government accounts for a third of total Scottish Government spending and therefore a third of procurement spend to Scottish businesses, large and small, and their record is simply nowhere near good enough in most cases.

“It is worrying that 13 councils do not collect the information, so we have no idea how well or badly they are doing.

“Scottish businesses deserve better and small businesses will be particularly hit by the lack of prompt payments. All of the public sector must do better to pay its bills faster ... it is not enough for the Scottish Government just to talk about prompt payment. They need to make sure it happens on the ground.”

Mr Henderson told us: “The figures presented by the Scottish Conservatives are quite shocking. With Borders businesses facing hard trading conditions in the current economic climate, payment of invoices is vital for their cash flow.

“It’s very disappointing that SBC does not collect information when they should be taking a lead and showing best practice to the private sector in the region.

“We have been lobbying for some time to get access to sub-contracting opportunities for local businesses on projects like the Borders Railway and have encouraged our members to join SBC’s supplier development programme to improve their chances.

“But if businesses now see these public sector contracts are not going to be paid on time, where is the motivation to apply for them?”

A spokesperson for SBC said the council had paid 83,704 invoices in 2009/10, 73,196 (87.45 per cent) of which had been paid within 30 calendar days which was “the standard terms of trade”.

In 2010/11, 75,868 bills had been paid, with 69,165 (91.16 per cent) settled within the 30 days.

“The council continuously monitors its performance with regards to the time it takes to process invoices within the statutory 30-day period,” added the spokesperson.

Mr Henderson retorted: “I welcome the fact that SBC appears to be improving its payment performance, but one is left to speculate that most of these bills were paid towards the end, rather than the beginning, of the 30-day period.

“At present, while there is no statutory onus on councils, I believe there is a moral obligation to help local businesses with prompt settlement.

“The fact that SBC does not hold the information on payments within 10 days shows it has not reacted as it should have to the encouragement for prompt payment coming from Holyrood.”