Major departments show marked decline in prompt-payment performance

Written by Sam Trendall on 17 August 2020 in News
News

Data shows that suppliers have been waiting longer to be paid as government deals with coronavirus crisis

 

Credit: Mohamed Hassan from Pixabay

As the coronavirus crisis took hold, some major government departments saw a big decline in the proportion of their suppliers being paid within target deadlines.

Over the course of the last couple of weeks, many departments have published quarterly prompt-payment data for the first quarter of the 2021 fiscal year – covering the period from 1 April to 30 June.

Government’s target is to pay 90% of invoices within five days, and the remainder within 30 days.

But, at the height of the coronavirus crisis, two of Whitehall’s biggest departments – and two that had among the biggest workload in leading government’s response to the pandemic – showed a significant drop-off in the proportion of suppliers being paid promptly.

During 2019/20, quarterly data from the Department for Work and Pensions showed that the proportion of invoices paid within five days never dropped below 94.2% – and, in some quarters, was as high as 98.7%. Throughout the year, about 99% of suppliers were paid within 30 days.

But, in the first quarter of FY21, the department managed to pay just 71.2% of invoices within five days. Some 7.3% of suppliers were still awaiting payment after 30 days.


Five days
Time within which government aims to pay 90% of its bills


7.3%
Proportion of DWP suppliers that were still awaiting payment after 30 days in Q1 of FY20


2015
Year in which prompt-payment targets, and mandatory reporting of performance, was introduced


73.8%
Proportion of HMRC invoices paid within five days in Q1


There was a similar story at HM Revenue and Customs which, in 2019/20, paid between 91% and 95% of its bills within five days and, in each quarter of the year, achieved well over 99% of invoices paid inside 30 days.

In April to June 2020, more than one in four suppliers (26.2%) had to wait more than five days to be paid the tax agency, while the number of invoices paid within 30 days also fell by several points, to 96.2%.

The Foreign and Commonwealth Office, meanwhile, paid 87.7% of its bills within five days during FY21’s opening quarter. This compares with figures of 96-98% for each quarter of last year.

Leaders and laggards
Prior to the declines, these departments were among Whitehall’s best performers on prompt payment.

Data for the past 18 months shows that the Ministry of Justice pays about 85% of invoices within five days, and 97% within 30. This has been maintained during the coronavirus crisis.

During the quarter that ended on 30 June, the Cabinet Office – which oversees government prompt payment policy and targets – paid 87% of bills within five days, and 98% within 30 days. This is in line with its performance during the 2019/20 year,

Public Health England, which publishes stats every month, paid 76.7% of suppliers within five days in July 2020 – its lowest rate in 15 months. But the agency consistently achieves a five-day payment rate of 80-85%, with 85-90% of invoices typically paid within 30 days.

The Department for Environment, Food and Rural Affairs is one of Whitehall’s most inconsistent performers on prompt payment; in the last six quarters, its proportion of suppliers paid inside five days has fluctuated from 58.2% to 84.9%.

During the first quarter of FY21, the department paid 80.8% of bills in less than five days, and 91.3% within 30.

The Department of Health and Social Care – which has not published any data since the third quarter of the 2019/20 year – has become one of government’s least prompt payers in the last couple of years.

Up until the end of FY18, the DHSC routinely paid more than 95% of invoices within the five-day target. 

This figure dipped to around 65-70% in the first and last quarters of 2018/19 and continued plummeting during FY20.

For the year’s opening three quarters, its five-day payment stood at 64%, 55% and 49%, respectively.

 

About the author

Sam Trendall is editor of PublicTechnology

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