Mary Glindon MP has written to the new chair of the Local Government Association, councillor David Sparks, alerting him to the likely impact.
In her letter, using research from the House of Commons Library, she highlights the forthcoming changes to legislation which will compel Councils to make payments to their suppliers within 30 days or face fines of between £40 and £100 for EACH invoice.
Glindon is a member of the House of Commons Communities and Local Government Select Committee.
Under the new proposals, all public authorities will be required to publish their payment performance in detail and also calculate and apply the financial penalties inherent within the late payment of commercial debts act – regardless of whether they have paid these amounts or not.
This will allow for more scrutiny from local businesses leaders who are paid late by local authorities.
Estimates from financial experts Oxygen Finance show that a typical upper tier Authority could be faced with a new and visible annual liability of between £300,000 and £750,000 unless they can comply with the changes.