Mary Glindon, MP for North Tyneside, has warned councils that late payments to businesses will soon begin to hurt them financially, highlighting that forthcoming UK and European legislation will force authorities to pay within 30 days or face financial penalties.
In addition, Mrs Glindon, a member of the House of Commons Communities and Local Government Select Committee, stated that Councils will be required to publish their payment performance in detail – including any penalties incurred – regardless of whether the amounts in question have been paid or not.
Estimates by Oxygen Finance indicate that a typical upper-tier Council could face an annual liability of between £300,000 and £750,000 if they fail to comply with forthcoming legislation.
Glindon referred to the issue as a “Ticking time bomb facing our Councils” and has likened it to the “equal pay for equal value legislation, whereby Councils who were not ahead of the game faced serious financial costs.”
Underpinning Mrs Glindon’s message is a clear call for urgency: “Councils need to prepare now for the forthcoming changes which, in any event, are vital for local businesses in their areas and will help boost economic growth by addressing the cash-flow crisis.”
Oxygen Finance has played its role in the debate for many months; at Westminster Hall on 22nd July, Mary Glindon cited the company specifically as a successful early payment vehicle being implemented by many Councils already.
Roberto Moretti, Chief Executive of Oxygen Finance Limited, believes the legislation will have a dramatic effect on small and medium sized businesses; he comments: “The legislation is hugely positive for SMEs, both ethically and financially and the effects will ripple across the business community, enabling businesses of all sizes to pay their own suppliers earlier.”
Mr Moretti continues: “Acting in partnership, our Early Payment programmes help Councils comply with incoming legislation and improve payment performance. The Oxygen solution generates a new income stream for Councils in addition to providing the strength and depth of resources they need to implement changes which are of direct benefit to SMEs and the local community.”
The need for early payment by local authorities to SMEs has been widely reported by the financial and business media. Further reading is available at: