City saved $1 million through vendor discounts for early payment



    TORONTO, March 7 /CNW/ - The City saved $1 million thanks to an
initiative it launched to obtain discounts offered by vendors to the City for
early payment of invoices.
    "This milestone demonstrates the ongoing, corporate-wide efforts to
ensure the responsible and efficient management of City finances," said Mayor
David Miller. "By increasing financial controls over public funds, the City
has realized savings that are being used as part of the City's operating
budget to help pay for services affecting the quality of life of Toronto
residents."
    As a result of improvements to the City's accounting processes, in
April 2005 the City officially launched the corporate-wide initiative to
maximize the City's efforts in obtaining early payment discounts offered by
vendors. Vendors offer a discount term, typically two per cent to three per
cent, on their billing invoice for goods and services if paid within a
specified period.
    "The City's administration is now winning awards for its financial
management excellence and we continue to implement and monitor additional
financial improvement initiatives," said City Manager Shirley Hoy.
    As of September 30, 2006, 90 per cent of all the City's invoices were
paid within the City's standard payment term of 60 days. In 2006, the City
received 82 per cent of the discounts that vendors offered to the City.
    "Thanks to the commitment of City staff to using resources wisely, we
have seen significant increases year after year in the amount of early payment
discounts that the City is receiving, culminating in this $1 million mark,"
said Joe Pennachetti, Deputy City Manager and Chief Financial Officer.
    The City's rate for obtaining discounts from vendors increased from
30 per cent in 2004 to 82 per cent in 2006 - a 52 per cent improvement. The
City has also realized a dramatic 547 per cent increase in vendor discounts
received from 2004 ($96,835) compared to 2006 ($626,296).
    As the amount of early payment discounts that the City receives
increases, the number of vendors willing to offer the City early payment
discounts also increases.
    The Chief Financial Officer and Treasurer reports to the General
Government Committee on a quarterly basis on the percentage of invoices that
are paid according to terms, the number of invoices that have been paid past
the term and the penalty cost that is incurred.

    Toronto is Canada's largest city and sixth largest government, and home
to a diverse population of more than 2.6 million people. It is the economic
engine of Canada and one of the greenest and most creative cities in North
America. In the past three years Toronto has won more than 50 awards for
quality and innovation in delivering public services. Toronto's government is
dedicated to prosperity, opportunity and liveability for all its residents.

    
                     Visit our website at www.toronto.ca
    




For further information:

For further information: Cindy Bromley, Manager, Finance and
Administration Communications, (416) 392-4993


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