Data reveals the government owes £1.7 million to its suppliers in unpaid invoices

The government owes £1.7 million to its suppliers in payments dating back to June 2007, data obtained by Freedom of Information Request reveals. Meanwhile, government departments themselves are owed £290k from outstanding invoices, the oldest of which was sent in March 2006. 

The highest invoice still to be paid is just over £757, 000 by the Ministry of Defence, from June 2023. The largest unpaid receivable is £193,000 owed to the Office of Rail and Road from services delivered in March 2025. 

Invoice management challenges were almost universal, with the only government department to report no outstanding invoices - payable or receivable - being Ofwat. This indicates that effective invoice management is challenging, but ultimately achievable. 

Breaking down the delays

Government departments owe late invoices ranging from 19 days to 18 years, with the oldest being a clear outlier, as the visualisation below demonstrates. 

Conversely, invoices owed to departments are consistently later, ranging from 56 days to 19 years late, suggesting that the government is better at managing its payment obligations, than those of its customers. 

Laura Elliston, Senior Finance Automation Strategist at Quadient, who conducted this research, emphasised the impact these delays have on both businesses and government activities.

She commented: "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."

Elliston explained that unpaid invoices reduce a business’ working capital, presenting a particular challenge for those who rely on invoices yet to be paid to fund this capital. This could lead to businesses struggling to plan ahead, safeguard against emergency spending, or even pay overheads. 

This is a particular issue for SMEs who Elliston has even seen scaling back their operations as a result of delayed invoice payment preventing new hiring rounds being possible.  

Breaking down the amounts

Of the 24 ministerial departments investigated, one third owed more than £10k in their oldest outstanding invoice to businesses. This compares to one sixth of the oldest invoices owed to departments being worth over 10k.  

The tables below break down the highest amounts that departments owe and are owed from their oldest outstanding invoices, indicating significant sums of money are at stake on both sides. 

“It can be detrimental to have invoices that are even a month or two months overdue, it’s astonishing to think how much ten years overdue can have an impact on day to day work” for businesses, highlights Elliston.      

Notably, the third largest payment owed to a government department, the Department for Education, dates back nearly 14 years. This means funds which could contribute to public service delivery have been stalled for over a decade, impairing government delivery.

Regulation at the present

Notably, the oldest invoices on both lists actually predate the introduction of codes of practice designed to speed up invoice management. The first of these was the 2008 Prompt payment code (PPC) a voluntary code of practice for businesses, set up by the Department of Business and Trade.

Following this, in 2015, the government's Prompt payment policy mandated that departments should aim to pay 90% of undisputed SME invoices within 5 days and 100% of all invoices by 30 days. 

The PPC was succeeded by the Fair Payment Code in 2024, designed to be more aspirational, which offers different tiers of awards for business found to be paying all invoices within 30 or 60 days. The code was created to encourage fair practice, however it remains voluntary for businesses.  

Regulating for the future  

Elliston emphasised the importance of developing robust digital solutions to avoid the risks associated with manual invoice processing. She highlighted that "the answer isn't simply stricter oversight or tougher rules – it's smarter, technology-driven processes."

She highlights the French Government's e-invoicing guidance as a successful example. Under the mandate, electronic invoices are exchanged via certified platforms that transmit key invoice data to the government's central portal, enabling real-time oversight of transactions and improving VAT compliance.

Whilst there are some government bodies who use e-invoicing systems - such as the NHS who use Peppol - Elliston thinks a “uniform e-invoicing standard across public sector bodies” and “the establishment of definitive timelines” would  provide the clarity and consistency businesses require to reduce uncertainty.  

Quadient’s systems provide an example of how a successful digital invoicing platform can work. They have developed accounts payable and receivable platforms which offer automated matching of invoices to purchase orders and reduce manual errors. Their real time dashboards allow businesses to monitor their payment and delivery statuses, helping clients to identify bottlenecks.  

Elliston recognises the importance of providing “proactive implementation support,” particularly for SMEs and public sector bodies, when introducing new e-invoicing systems, as they may be facing a challenging transition from legacy systems. 

The government are making strides to respond to this digital transformation need, having launched a 12 week consultation on e-invoicing which concluded in early May. An announcement on an e-invoicing development plan for UK businesses is therefore expected soon.