Paying Suppliers on Time Can Really Pay Off

11 November 2019


Local authorities across the UK are continually striving to find new ways to reduce costs and increase efficiency. Yet one area where potential efficiencies and cost savings often are not maximised is payment of supplier invoices.

Failing to pay suppliers on time can be an expensive cost for authorities, as tighter legislation means all unpaid invoices must be reported and may incur a minimum late payment fee of £40 plus interest at 8% above the base rate2.


Benefits of early payment

Cash-strapped authorities cannot afford to be in a damaging position, so it’s clearly smart to pay invoices on time. 

  • Discounts for early payment of invoices - larger, high-volume suppliers, a highway maintenance company working on a major long-term contract for example, may offer discounts for early payment of invoices, which local authorities are able to treat as revenue. 

For instance, a County Council we work with gets an early payment discount from one of their main contractors, which benefits from a multi-million pound work stream with the authority.

Applying a blanket policy of paying all suppliers early will clearly put pressure on local authorities’ working capital, so it’s important to distinguish between different groups of service providers and adapt payment policy accordingly.

Solutions available

There are a number of solutions available to help local authorities manage the costs of early payment and to bridge the gap to invoice due date:

  • Card payment solutions – for smaller contractors
  • Low interest trade loan facilities – for larger contractors
  • Cutting edge invoice management and processing systems, such as Early Payment Programmes or Barclaycard’s Precisionpay platform

Read the article on the benefits of early payment for local authorities PDF 1MB

2The Late Payment of Commercial Debts Regulations 2013: https://www.gov.uk/late-commercial-payments-interest-debt-recovery/


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