Small businesses suffer late payments by hospital trusts

NHS hospital trusts have become the latest bete noire of small business owners angry about late payment from large organisations.

Although some hospitals have cut the time they pay bills to as little as 10 days in recent years - following central government's lead - small business groups have noted an increase in complaints about hospital trusts moving in the other direction.

Jackie Lloyd-Jones, founder of urology products supplier JLJ Healthcare, claims that several hospital trusts she supplies have stretched payment times in recent months. Southend University Hospital, which previously paid JLJ in 30 days, last week told Lloyd-Jones that they would in fact be paid 30 days from the end of the month when an invoice was received.

"It just hacks me off that I am being taken advantage of as a small business by a government body," Lloyd-Jones said.

Brian Shipley, Southend's director of finance, said the hospital had not changed its payment policy. "We aim to pay our suppliers within 30 days from receipt of the invoice, provided the goods or services have been received," he said. "Regrettably, for a variety of reasons this is not always possible but our payment policy remains the same."

The Forum of Private Business, which has compiled a "hall of shame" of companies that have significantly worsened their payment terms to suppliers, would like the government to do more to tackle the issue.

Phil Orford, the FPB's chief executive, said: "The government should be focusing on late payments as much as they are focusing on the banks."

Under the last government, payment terms were reduced to 10 days for Whitehall and 20 days for local authorities.

This has been continued by the coalition government, in spite of criticism of the practice by entrepreneur Sir Philip Green.

The European parliament last month adopted a late payment directive setting a maximum cap of 30 days for the public sector to settle its bills and a limit of 60 days for business-to-business transactions.

However, most businesses remain sceptical about the effect the new law will have. Only 48 per cent of credit managers interviewed by credit reference agency Graydon UK felt that the EU directive would help tackle the late payment issue.

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