A BUSINESS leader has expressed concern over a pledge by council chiefs to fast-track payment of invoices to suppliers in return for a cash discount.
More than 3,000 suppliers that help South Tyneside Council provide a range of key services – from books and materials in schools and libraries to highways maintenance and waste disposal – have been invited to sign up to a new scheme.
Companies that sell goods or services to the council will have their invoices dealt with weeks earlier than normal in exchange for a small cash return or discount as part of the supplier incentive programme.
Money saved by what council bosses are calling a “win-win” initiative will be used to protect existing services.
However, Ross Smith, director of policy at the North East Chamber of Commerce, is concerned at any implication that invoices are not being dealt with promptly otherwise.
He said: “The public sector has a duty to promote economic development, and using its procurement measures effectively is a way of doing this.
“Councils should be processing invoices as quickly as they can in any case, particularly for small and local businesses, as, for many, cashflow is a significant challenge.
“The implication that some invoices are not being processed as quickly as they could be is something we would be concerned about.”
Council leader Coun Iain Malcolm said: “Businesses, particularly small and medium-sized firms, are the backbone of our economy, therefore we feel it is important that we do all can to support them through these challenging financial times.
“Through the supplier incentive programme and paying businesses early, we can help our key suppliers to keep their cash flowing and hopefully ease the financial burden for businesses, which often need to fund the gap between payments.
“It is also an excellent way for us to strengthen our relationship with suppliers.” Coun Ed Malcolm, the council’s lead member for resources and innovation, added: “The scheme improves the council’s payment processes, with invoices dealt with much more efficiently.
“Money generated from early payments also goes back into protecting vital council services for local residents.”
Firm’s boss gives council initiative cautious welcome
ONE South Tyneside business boss has given the new fast-tracking invoice scheme a cautious welcome.
Total Office Supplies, based at Henry Robson Way in South Shields, was a supplier for the borough council until a couple of years ago.
Managing director Matthew Fairbairn said he could see the logic of the scheme but believes “every case is different”.
He said: “It all depends on your margins and on your cashflow. If it is a big customer to you and cash is tight, then, yes, it is imperative to get the money in as quickly as possible,
“We have a customer who represents a large percentage of our spend who gets that sort of deal for paying us on time, not early.
“My judgement is that everybody should pay on time anyway, particularly councils.”
The council is contacting suppliers to provide them with details of the scheme.
Suppliers to South Tyneside Homes, which manages and maintains around 18,000 properties in the borough on behalf of the council, could also benefit from the initiative.
“The supplier incentive programme is a win-win initiative for the council and its suppliers,” said Coun Ed Malcolm, the authority’s lead member for resources and innovation.
“It helps suppliers with their cashflow and supports the protection of vital local government services.”
For further details, call 603 1855, e-mail email@example.com or visit www.southtyneside.info/sip