Anna Blackaby looks at the good, the bad and the very late payers among the region’s local authorities.
Solihull Metropolitan Borough Council has topped the league table of the best local authorities to do business with in the West Midlands if you want your company to be paid swiftly.
The council takes an average of 9.9 days to settle its bills, bringing it into line with government recommendations for local authorities to pay suppliers within ten days.
Many of the other West Midland urban councils paid up in around 14-16 days including Birmingham City Council, Walsall Borough Council, Sandwell Metropolitan Borough Council and Dudley Metropolitan Borough Council.
But Wolverhampton City Council said its suppliers were paid in an average of 29.25 days and Coventry City Council said it did not hold data in the format of average payment times.
The figures suggest Solihull appears to be the only local authority in the area to have heeded Lord Mandelson’s calls in October 2008 for local councils and hospitals to pay suppliers within ten days in a bid to help keep cash-starved firms afloat during the recession.
Solihull Council managed to pay 63 per cent of its suppliers within a ten-day period, Birmingham City Council paid 56.1 per cent in the same time and Walsall and Sandwell councils were at 52.8 per cent and 50.2 per cent respectively, although Wolverhampton did not manage to pay any bills in that time frame.
But all seven councils managed to pay the vast majority of their suppliers within 30 days.
The West Midland figures emerged following a major study conducted by the Forum of Private Business which found large-scale national variations in the times it took councils around the UK to pay their suppliers.
Overall, the average time local authorities take to pay invoices was almost double the ten-day target, at 19 days.
The UK average for the payment of bills within ten days was 42 per cent, but stark regional variations meant that this figure was as high as 52 per cent in some areas and as low as 11 per cent in others.
Federation of Small Businesses West Midland area policy unit chairman David Caro said the figures for the West Midlands councils were “quite reasonable”.
“We’re glad to see that people are working to the government’s wish to bring down their payment times,” he said.
“Prompt payment is absolutely vital as a lot of small firms have to pay cash for products they are selling to the councils and there is always that gap in cashflow. It’s vital that all councils and all businesses whether they be public or private pay up on time to agreed terms.”
Mr Caro said that it was also extremely important that companies dealing with councils cascade the benefits of their swift payments down to their own suppliers.
“It’s not so much delays with the councils, it’s whether those companies that are doing business with the councils are passing it down the supply chain,” he said. “If major contractors aren’t passing down the same courtesy to their suppliers, then councils should heavily encourage companies to do it.”
Mr Caro said that it was often the private sector which was the worst culprit in not paying up on time, citing FSB member firms in the West Midlands who had been told by their customers that 30-day standard payment terms were to be increased to 60 days without discussion or clients stating they expect money off their bill for paying on time.