Officials at Birmingham City Council were bombarded by 30,000 invoices from a catering firm in a year - at an estimated administration cost to the local authority of £1.8 million.
The payment system for school meals, which the council admits is grossly inefficient, meant that finance staff had to process a cheque for each separate invoice, even though some of the bills were for less than £100.
The company, which the council is not naming, is described as a small local firm which has supplied food to Birmingham schools for many years.
Deputy council leader Paul Tilsley said it cost the city about £60 in staffing costs and overheads for each invoice dealt with.
Because the firm is too small to have electronic payment facilities, a cheque had to be posted for each invoice.
Details of the payments emerged during an investigation into the council's annual £1 billion bill for buying goods and services from the private sector. Local authorities are under pressure from the Government to cut procurement costs and Birmingham expects to make £3.2 million in savings next year.
Coun Tilsley (Lib Dem Sheldon) criticised a "culture of inefficiency" which he said had allowed many of the council's suppliers to submit thousands of invoices each year rather than submitting bills quarterly or half-yearly.
A recruitment agency insists on issuing an invoice for each individual person placed with the council, he said.
Coun Tilsley said: "This is creating horrendous problems.
"If a local supplier sends in an invoice for £10 the cost to the council of dealing with it is just the same as it would be to deal with a £1 million invoice."
Almost half of the hundreds of companies supplying the council provide goods worth less than £1,000 a year.
Coun Tilsley has ordered a ban on all non-essential purchases of goods.
He admitted a moratorium on buying new office furniture had proved only partly successful since some departments were ignoring the order.
He added: "There is a culture that has been around for many years that if there is a budget for something then it must be spent by the end of the year.
"I am clear that if people turn around and say we have our own system and arrangements then they better come to work with cast-iron drawers on. I can growl, I can bite and I can get very stroppy at times," Coun Tilsley said.
The council is looking at ways of ordering more goods from Birmingham- based companies.
Coun Tilsley said he would examine a suggestion that local firms should be favoured even if they proved more costly than national or multinational conglomerates. He is considering a proposal that Birmingham suppliers should always be given contracts if they can supply goods at no more than five per cent above the cost of outsiders.