Lancashire County Council is bringing in a new cutting-edge system to ensure its suppliers are paid more quickly.
The Early Supplier Payment System, agreed by the cabinet at its meeting last week, means that businesses can sign-up to be paid earlier than the time set out in their contract.
Payments are usually made within 30 days. However, with the Early Supplier Payments system, businesses will be prioritised in the payment queue using specialised computer software.
In return for the county council making early payments, businesses will give a small rebate, which varies depending on how soon they receive the payment. However, they will have the money in their account which improves their cash flow.
County Councillor Geoff Driver CBE, leader of Lancashire County Council, said: “We deal with hundreds of businesses every single day, from companies who supply materials for roads, to agencies who deliver our social care services.
“Good cash flow is the life blood of these businesses and we need to do all we can to help.
“In other councils where the system is in use, the average time until suppliers are paid has reduced to 14 days.
“This system has been tried and tested and is making significant savings in other areas of the country and we hope to generate £500,000 over the next three years.”
The system will be free to use for small businesses, who will not have to give rebates.