A late payments initiative, launched by UK payments service provider Oxygen Finance, aims to unlock £1.5bn for local authorities over five years as it tackles the issue of late payment.
The early repayment programme is designed to enable buyers such as local authorities to pay suppliers more quickly in exchange for a cash rebate. Those authorities that pay early will receive a rebate of at least 1% of the amount they have paid out from Oxygen, which will also take a cut.
The scheme has been piloted by Oldham council and could now be rolled out to other UK authorities in the UK. Oldham council hopes to generate an estimated extra four-year income of £2m from £73m that it is putting through Oxygen’s programme.
Roberto Moretti, who joined Oxygen as European chief executive officer (CEO) in November, said that small businesses spend an average of 14 days each year chasing payments at a cost of £680m. “There are also examples of local authorities spending more money processing low value invoices than the actual price of the product or service they commissioned,” he added. “Invoices cost a minimum of £70 to process and hundreds go through systems worth less than that.
“Local authorities alone in the UK annually spend £172bn – £75bn on running expenses – and have quasi-AAA credit ratings, yet they waste money on a needless, slow, paper-based system of payments.” Moretti added that the scheme will boost cashflow for small and medium-sized enterprises (SMEs), while also delivering extra funding to councils.
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