Government departments are failing on a pledge to pay trade invoices to small and medium-sized enterprises (SMEs) within 10 days, according to business information provider Graydon UK.

Graydon said it has carried out a survey of businesses which shows that almost two thirds of SME respondents (63 per cent) were forced to wait more than 30 days for government invoices to be settled.

This is triple the amount of time that business secretary Lord Mandelson had originally pledged in October 2008 for departments to settle them.

The survey shows that 98 per cent of those SMEs questioned, who are suppliers to government agencies, local government bodies and central government, said they are still not being paid within the 20-day timeframe.

Ministerial willpower not enough

The figures also appear to paint a slightly worsening picture compared to Graydon UK’s previous survey in March 2009, which showed that 60 per cent of firms had to wait more than 30 days to receive payment.

Graydon UK managing director Martin Williams said: "The sentiment underlying the government’s pledge to radically curtail payment periods in the public sector is laudable but unfortunately it’s now apparent that ministerial willpower hasn’t been enough to inject more speed into the machinery of the public sector."

He added: "It’s difficult to gauge how damaging the impact of this failure has been in terms of exacerbating the cash flow problems faced by small firms during the downturn.

Public sector must set a better example

"What’s certain, however, is that the public sector needs to set a better example when it comes to paying for goods and services on time."

Williams explained that government agencies may point to issues around securing payments from their own customers, as a reason for continued delays.

He said: "This may be a valid concern in many cases but in truth this merely serves to underline the need for these public sector bodies to become more efficient at collecting money owed and managing their debtors efficiently."