Firms are urged to pay promptly (From The Northern Echo)

Firms are urged to pay promptly

12:27pm Wednesday 30th December 2009 in

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PRIVATE companies have been urged to ensure they pay bills from small firms within days, following the lead of the North-East’s local authorities.

The North-East is the first English region to have all its local authorities sign up to the Prompt Payment Code, which guarantees firms that invoices will be paid within days.

The code, introduced by the Government, aims to ensure that small firms are not hit by cashflow problems while waiting for bills to be paid.

All 12 local authorities in the North-East have signed up and are committed to paying invoices within ten days.

The Government said that about 4,000 UK companies closed last year due to bills not being paid promptly.

This year, British businesses are expected to pay more than £180m in interest charges to banks for overdue payment.

Last night, Trade, Investment and Small Business Minister Lord Davies called on private firms to follow the local authorities’ lead.

He said: “Settling bills promptly can make all the difference to the cashflow of a small business.

“Every part of the supply chain must help ensure prompt payment to support our small businesses.

“I commend the efforts of the local authorities in the North-East in supporting their local suppliers through prompt payment, and urge both public and private sector to follow their lead.

“As well as benefiting suppliers, paying promptly could benefit customers by helping firms to keep prices lower.”

In November, the Forum of Private Business reported that the average payment time for local authorities in England is 18 days, with 42 per cent of all invoices paid within ten days.

Nineteen out of 20 central government invoices are now paid within ten days, an improvement of 24 per cent in the last year.

Organisations in the region which have already signed up to the code include NHS Trusts and regional development agency One North East.

Malcolm Page, deputy chief executive at One North East, said: “It’s never been more important for businesses, particularly small and mediumsized firms, to receive prompt payment for their services, so it’s great to see that the North- East is leading the way in this practice.”

Figures released today also show that a scheme allowing recession-hit firms to spread tax payments, extended in the pre-budget report, has now been used more than 7,000 times in the North-East.

The Government statistics show that local firms have been assisted with 7,530 cases of tax deferral under the Time to Pay scheme.