Exclusive Lloyds Banking Group’s (LBG) failure to settle debts with some tech suppliers over the past few months has reached “crisis” point, and could have dire consequence for smaller players, sources tell us.
The High Street lender recently automated its payment processing system and brought it back on-shore with the intent of speeding up the delivery, but unspecified teething problems have created a bottleneck.
“Due to the combination of year-end, inadequate IT systems and low staff resourcing over the Xmas break… the bank's suppliers are facing several months long delays,” said one well-placed source.
We are told that suppliers of technology and from other industries have waited since November for invoices totalling £30m to be settled. LBG played down the scale of the problem.
The Account Payable Helpdesk has stopped answering calls from suppliers due to the volume of queries, instead putting in place a recorded message confirming it is aware of the problems.
“We are currently dealing with a high volume of payment requests due to seasonal demand, we are currently working on invoices received on 26th November,” stated the Lloyds message.
“Please do not hold if your invoice was received after this date as we are working in date order and no priority can be given,” it added.
Cash flow is king for businesses and according to R3, the association of business recovery specialists, late payment was the root cause for one in five insolvencies last year.
Suppliers have been told not to submit further invoices until the backlog is cleared, according to one source, “[this] is an ongoing IT-related payment crisis”.
“In the meantime, my company, which supplies major contracts and services to Lloyds Banking Group are facing possible bankruptcy and layoffs due to late payments and absolutely no information on when we might get paid”.
Talking to The Channel, a mouthpiece for LBG said: “Following recent changes to the group’s invoice processing systems, a small proportion of our suppliers have experienced delays. We are working to rectify this as quickly as possible, and apologise to those suppliers impacted.” ®