UK government faces backlog of invoices totalling GBP £2M

UK government departments have accumulated a backlog of outstanding invoices dating as far back as 2006, with delays in payments and receivables totalling nearly GBP £2 million, according to new Freedom of Information data obtained by Quadient.

The analysis, which reviewed the oldest invoices held by various government departments, revealed that departments owe a combined GBP £1,657,881.39 to suppliers, while simultaneously being owed at least GBP £289,262.48 by their own customers. The data highlighted that the oldest invoice owed to a department traces back to 2006 at the Department for Work and Pensions. In contrast, the government itself still has invoices to pay from as early as 2007, most notably by the Foreign, Commonwealth & Development Office.

Prompt Payment Code regulations were introduced in 2008, mandating undisputed invoices to be settled by government departments within five days, and all others within 30 days. The findings indicate, however, that these rules are not always followed. The Ministry of Defence currently holds the highest single outstanding invoice, valued at over GBP £757,000 and dating from mid-2023.

The report draws attention to the significant practical repercussions of prolonged payment delays, with the potential to impact service provision as well as suppliers' financial stability.

"While there are many reasons for slow payments, such as disputes, unfinished work, or personnel changes, these delays aren't simply administrative oversights – they have real, tangible consequences. Behind every unpaid invoice lies a business potentially facing cash-flow challenges, a contractor unsure if they'll be paid, or a critical public service disrupted. The fact some invoices are outstanding for nearly 20 years exposes that delays and difficulties can rumble on for years or even decades. While there will always be exceptions, these delayed payments cannot become more than outliers. If even well-regulated government departments can struggle this badly, the scale of the challenge facing private-sector organisations is clear," Laura Elliston, Senior Finance Automation Strategist at Quadient, commented.

Closer examination of the ageing invoices reveals considerable variation across government bodies in both their accounts payable and receivable. The time frame for invoices that departments owe ranges from just 19 days to 18 years outstanding, with the oldest examples being described as outliers. The government departments associated with the most longstanding debts include the Foreign, Commonwealth & Development Office (mid-2007), the Department for Environment, Food and Rural Affairs (early 2018), and Ofgem (early 2019).

The situation is mirrored in the aged receivables, where invoices owed to government bodies span from 56 days to nearly 19 years late. The departments with the oldest unpaid receivables are the Department for Work and Pensions (early 2006), the Ministry of Defence (mid-2006), and the Department for Education (late 2009). The Office of Rail and Road is owed the highest single receivable, a sum in excess of GBP £193,000.

Only Ofwat reported having cleared all its invoices, with neither payables nor receivables outstanding, indicating that effective management in this area is possible despite the broader trend.

The findings prompt consideration of the systems and practices used to manage government payments and invoicing.

According to Elliston, the problem is less about oversight and more about operational efficiencies.

"The answer isn't simply stricter oversight or tougher rules – it's smarter, technology-driven processes. Automating invoice management through solutions such as e-invoicing provides enhanced visibility and significantly reduces the risks associated with manual processing. Departments and businesses alike urgently need to invest in these advanced solutions to ensure that financial management is timely, accurate, and efficient. Waiting for new mandates or procurement processes to evolve is no longer an option when financial stability hangs in the balance," Elliston said.

The study further noted that forthcoming e-invoicing mandates in the UK are likely to require companies and departments to transition to digital and automated systems, with the intention of improving accuracy and timeliness in payments.

The data suggests that even with mandatory payment codes and regulatory oversight in place, challenges persist in timely invoice settlement across multiple government entities. The report concludes that robust invoice management systems and automation are essential to improve financial processes and mitigate risks related to delayed payments.