Local government pays suppliers 35 days earlier than the private sector
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In 2022, town councils, county councils and councils have paid suppliers 49 days on average. It is an excellent figure that leaves behind other times when some public administrations were bad payers. The public sector now pays bills faster than the private sector, specifically 35 days earlier, almost half the time. according to thereport of the Spanish Confederation of Small and Medium Enterprises (CEPYME), companies pay, on average, in 84 days.
This excellent result in the local administration has been achieved thanks to the obligation of electronic invoices and digitization that streamlines the entire internal process. And, above all, to the liquidity and term control policies promoted by the European Commission following the economic crisis of 2008.
The digital transformation of the Administration has the ultimate goal of improving people's lives. In this case, improve the lives of companies by guaranteeing their financing and, therefore, their economic activity.
The Top 10
The ten local public administrations that pay the fastest are:
In addition, the payment term of local administrations is improving year after year since 2016. In this period it has been reduced by 26 days, which implies a 35% cut in time.
The AOC pays in 13 days
As for the AOC, we have paid to 13 days to suppliers in 2022. This is a 30% reduction in time compared to 2021, when we paid 19 days. The AOC manages all invoices with a completely digital process: entry, accounting, portasignatures, approval, signature and communication of the change of status.
How did we calculate the payment term?
We have calculated the payment term based on invoice information managed by the AOC's e-FACT service, which has detailed and rigorous check-in date and payment date information. To make this calculation, we have not used the legal concept of “half payment period” which inform the municipal auditors given that it has several calculation systems that are not so understandable by companies. In any case, the data communicated by the auditors are, in general, better than the ones presented in this study because, for example, they count the period from the date of approval of the invoice (not from the date of registration) and there can be a delay of up to thirty days.
Administrations with low quality data have not been included in the calculation, basically because they do not automatically update the status of payments from accounting to e-FACT.
About the e-FACT service
The e-FACT service started in 2011 managing 4.000 invoices. By 2022, it has managed 4.3 million invoices, from 1.700 public bodies and 80.000 companies, generating savings of more than €47M.
