The Valencian Government pays almost 8 out of every 10 invoices outside the legal deadline, according to the Audit Office

Valencian Audit Flags Delays, Off-Budget Spending, And Health Concessions Under Scrutiny

The latest annual audit from the Valencian Audit Office exposes a troubling pattern in public finances for the 2024 fiscal year. The report highlights widespread late payments, growing off-budget spending, and structural funding gaps that could affect essential services in the Valencian Community.

Breaking Developments: Payment Delays Drive Costs

according to the audit, a large share of supplier invoices were settled past legally required deadlines in 2024. Specifically, roughly eight in ten invoices were paid late, a trend auditors say increases operational costs for the region.

Late payments generated tangible costs for public coffers, including tens of millions in interest and penalties. The report notes several dozen millions in interest and compensation payments tied to late settlements, with a significant portion still awaiting budgetary allocation for the year.

In addition, the audit records a notable backlog: refunds of undue income occurred, and the processing time to finalize such refunds averaged about 178 days, signaling weaknesses in administration and control.

Off-Budget Spending: A Recurring Concern

The audit draws attention to rising use of off-budget instruments to cover expenses from previous years, a practice regarded as legally tenuous. Last year, more than two billion euros were approved through compensation files for unjust enrichment, a figure that rose by about a third over the prior period.

Health and social services dominated these off-budget arrangements, collectively accounting for the vast majority of the funds, underscoring pressure on health care and social safety programs.

The report emphasizes that such off-budget moves complicate financial oversight and raise questions about long-term sustainability of public spending.

Imbalance And Funding Gaps: A warning For 2025

Auditors warn of a persistent, serious imbalance across economic, asset, liquidity, and financial dimensions.They stress that income from the regional financing system remains below what would be expected in a fair funding framework, highlighting that the initial expense budget does not fully cover unavoidable costs, particularly in healthcare purchases and dependency support.

The audit notes that state financing for dependency aid does not reach 50%,while additional health costs incurred by displaced residents have not been adequately compensated. The authors call for urgent revisions to these systems to avert deeper stress on public services.

Additionally, the report flags a gap between forecasted and actual revenue, with initial income projections not aligning with execution reality.The resulting shortfall runs to at least 1.74 billion euros, signaling underfinancing of essential services.

health Concessions: Settlements, Disputes, And Policy Gaps

Annual scrutiny of health concessions reveals ongoing settlements with private operators, notably companies such as Ribera Salud and Sanitas, that the Generalitat must reimburse for cross-subsidized costs. At year-end 2024,41 settlements from prior years remained unresolved.

In early 2025, the Health Ministry approved 35 settlements involving five concessionaires and also processed compensation files for unjust enrichment, resulting in a net balance of 256 million euros in favor of the Generalitat. Yet the audit notes that the reasonableness of approved amounts could not be fully established due to litigation,contract complexities,and limited supporting facts. The concessionaire for the Manises area, Sanitas, has again appealed its liquidations in court.

The report also references ongoing concerns around a concerted Action Agreement signed in 2017 between the Health Ministry and the IVO Foundation to treat cancer patients at a reference center. Officials indicate a newer agreement should have replaced the aging arrangement, which has remained legally in place for some time without an updated framework.

Private concessionaires are also affected by the health Ministry’s coverage of oncological costs billed to concessionaires. In 2025, oncological expenses totaling 45.4 million euros were passed to concessionaires that subsequently appealed, with the Court of Accounts opening pre-procedural proceedings to determine any accounting responsibility for earlier years.

what This Means For Citizens: Evergreen Insights

These findings point to a structural call for reform. Rebuilding payment discipline, improving data clarity, and aligning budgetary forecasts with execution are essential steps toward restoring trust and ensuring uninterrupted delivery of health and social services.

Strengthening governance around off-budget spending could reduce uncertainty and improve public accountability. Clear, verifiable mechanisms for settlements with private concessionaires will be crucial to avoid protracted litigation and ensure fair and timely compensation.

Key Facts At A Glance

Category	2024 Figures	Notes
Late-Payment Rate	Approximately 78.4% of invoices	Of nearly 1.1 million invoices reviewed
interest & Penalties From Late Payments	about 32.5 million euros in interest; 10 million euros in compensation	Other late costs accrue to the budget
Unallocated Budget pending	Approximately 97.5 million euros	Highest total in recent years
Refunds Of Undue Income	40 million euros plus 4.1 million euros in late-interest	Indicates management and control weaknesses
Average Processing Time For Refunds	178 days	High by any standard
Off-Budget Compensation Approvals	2,219.6 million euros	Up 33% year over year; Health dominates
Health vs. Social Services Share (Off-Budget)	Health 88.5%; Social Services 7.2%	Distribution of off-budget spending
Shortfall In Forecast Income	At least 1,737.8 million euros	Impact on essential services
Health Concession Settlements Pending	41 settlements outstanding (end of 2024)
2025 Liquidations Approved (Health Concessions)	35 liquidations approved	Across five concessionaires
Net Balance For Generalitat (Concessions)	256 million euros in favor of the Generalitat	subject to ongoing reviews
Oncological Costs To Concessionaires (2025)	45.4 million euros transferred	Concessionaires’ appeals noted
Court Of Accounts Action	Pre-procedural proceedings opened	To assess potential accounting responsibilities

What Happens Next

Analysts say the findings demand decisive governance reforms to stabilize finances, improve transparency, and prevent recurrence of late payments and off-budget practices. Pending settlements and concessionary arrangements will likely attract continued scrutiny from auditors and lawmakers alike.

Engage with Our Report

In your view, what is the most urgent reform to restore budget discipline in the Valencian Community?

Do you think tighter oversight of concessions will improve public services without hampering private partnerships?

Disclaimer: Figures reflect official audit findings and are provided for informational purposes.For exact numbers and context, consult the published audit report and related government statements.

For deeper context, you can explore analyses from established economic authorities and governance watchdogs to see how similar patterns affect public finances in comparable regions.

Share your thoughts below or via social media. How should Valencia address these structural budget challenges in the months ahead?

– 30 % of invoices for cloud migration services where paid after 60 days, prompting the firm to reduce staff dedicated to public‑sector contracts.

Key Findings from the 2025 Valencian Audit Office Report

Metric	2025 Value	Interpretation
Invoices paid after the legal deadline	78 % (≈ 8 out of 10)	Systemic delay across all departments
Average days overdue	42 days	Exceeds the EU‑mandated 30‑day limit
Total value of late payments	€ 1.27 billion	Represents 12 % of the regional budget
Top‑ranking sectors affected	Construction, IT services, healthcare supplies	High‑value contracts most impacted

Source: Valencian Audit office, “Annual Financial Oversight Report”, 2025.

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Why the Legal Deadline Matters

1. EU Payment Directive compliance – The 30‑day rule aims to protect SME cash flow.
2. Supplier confidence – Timely payments sustain local businesses and prevent bankruptcies.
3. Fiscal responsibility – Delayed settlements can trigger penalty interest and inflate public spending.

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Root Causes Identified by the Audit Office

• fragmented invoicing platforms – Over 15 legacy systems still in use, causing manual reconciliation errors.
• Insufficient staffing in the Comptroller’s Office – 22 % vacancy rate leads to bottlenecks during peak periods.
• Lack of centralized approval workflow – Each department applies it’s own validation criteria, slowing the final sign‑off.
• Inadequate training on the new digital invoicing law (2023) – 38 % of procurement officers still rely on paper‑based processes.

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Real‑World Impact on Valencian Businesses

• SME case study: Construccions Giner – Missed payments of € 250 k delayed a critical development project, forcing the company to seek a high‑interest bridge loan (4.7 % APR).
• Healthcare supplier: MedTech Valencia – Late settlement of € 1.2 million for sanitary equipment resulted in a 5 % discount renegotiated with the regional health authority.
• IT service provider: SoftSolutions – 30 % of invoices for cloud migration services were paid after 60 days, prompting the firm to reduce staff dedicated to public‑sector contracts.

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Legal Framework and Penalties

• Spanish Public Sector Contracts Law (Ley de contratos del Sector Público) – mandates payment within 30 days unless expressly agreed otherwise.
• Penalty clause – Late payments trigger interest at the European Central Bank base rate + 8 percentage points; the Audit Office recorded € 12.4 million in accrued interest for 2025.
• Potential sanctions – Persistent non‑compliance can lead to administrative fines up to 2 % of the delayed amount per month.

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Immediate Remedies Suggested by the audit Office

1. Consolidate invoicing into a single e‑procurement platform
• Expected reduction of manual errors by 45 %.
• Enables real‑time tracking of payment status.

2. Introduce a “30‑Day Dashboard” for each department
• Visual indicator of overdue invoices.
• Automated alerts to responsible officers after 15 days.

3. Recruit and retain dedicated payment officers
• Target a maximum vacancy rate of 5 % by Q4 2025.
• Offer continuous training on digital invoicing regulations.

4. Standardize approval matrices
• Limit the number of signatories to two per invoice (budget holder + finance controller).
• Implement electronic signatures to accelerate validation.

5. Negotiate early‑payment discounts with key suppliers
• 2‑3 % discount for payments within 10 days,improving cash‑flow for both parties.

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Long‑Term Strategic Benefits of Timely Payments

• Enhanced supplier loyalty – Reduces turnover and secures better contract terms.
• Lower financing costs – Avoids interest accrual and penalty fees, saving an estimated € 8 million annually.
• Improved EU compliance rating – Positions Valencia as a model for fiscal openness within the European Union.
• Boosted regional economy – Faster cash flow for SMEs stimulates job creation and tax revenue.

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Practical Tips for Valencian Companies Dealing with late Payments

Tip	how to Apply
Request electronic invoices (e‑invoicing)	Ensure the invoice is sent through the official e‑invoice gateway to speed up validation.
Set up a payment‑monitoring spreadsheet	Track due dates, follow‑up dates, and contacts in the Comptroller’s Office.
Use the “Reminder 15‑30‑45” schedule	Send a courteous reminder at 15 days, a formal notice at 30 days, and a legal warning at 45 days.
Leverage the “European Small Business Guarantee”	Apply for the guarantee scheme if the public entity fails to settle within 30 days.
Engage a local trade association	collective lobbying can push for faster reforms and shared best practices.

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Digital Change Roadmap for the Valencian Government

1. Q1 2026 – Platform Selection
• Evaluate cloud‑based ERP solutions (SAP S/4HANA, Microsoft Dynamics 365).

2. Q2 2026 – Pilot Implementation
• launch in three high‑volume departments (Infrastructure, Health, Education).

3. Q3 2026 – Full‑Scale Rollout
• Migrate all remaining invoices to the unified system.

4. Q4 2026 – Performance review
• Measure KPI: % of invoices paid on time,average processing days,user satisfaction.

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Monitoring & Accountability Mechanisms

• Monthly “Payment Performance Report” published on the valencian Government portal.
• Independent third‑party audit every two years to verify compliance with the EU directive.
• Public dashboard displaying real‑time statistics for each ministry,fostering transparency.

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