The government has been criticised for failing to adhere to its own guidelines with regards to prompt payments to small and medium-sized enterprises (SMEs).

It had previously committed to pay at least 80% of invoices from SMEs within five working days. However, several departments have failed to stick to that policy, and currently, around a third of smaller suppliers are being made to wait for payment on goods and services they have provided.

Late payments have been highlighted as one of the major obstacles facing SMEs in the current economy.

The government has passed legislation in recent years to try to ease this problem, such as encouraging larger firms to sign up to the Prompt Payment Code, and naming and shaming those that don’t. The fact that certain departments of the government itself are failing to pay smaller firms on time is a little embarrassing for those involved.

The findings were part of a report carried out by the National Audit Office. Head of the Office, Amyas Morse, said: “UK businesses told us they welcome the Government’s commitment to pay invoices early; however, there has been a disappointing lack of effort by the Government to check whether the implementation of the policy is actually helping SMEs.

“We are also seriously concerned about the prompt payment performance figures publicly reported by departments. These were overstated by the four departments we looked at. It remains to be seen whether the changes proposed in the Small Business, Enterprise and Employment Bill, and secondary legislation will be enough to bring about improvements, not just in public sector payment practices but the private sector as well.”

Throughout its various departments, the government spends around £40billion a year on goods and services, with around 10% being supplied by small businesses.

Please contact us if you would like more information about credit control and debt management.