Lincolnshire County Council has apologised to staff and suppliers after mistakes by service firm Serco led to errors in payment.
Hundreds of council staff, including teachers, have been underpaid since Serco took responsibility for the system in April.
And there have also been delays paying some of the council’s suppliers.
The council said it had made emergency payments while the problems were resolved.
Chief information and commissioning officer Judith Hetherington Smith said: “The issues with the new system have caused problems in making payments on time, and we thank all of our affected suppliers and employees for their patience.
“The council has apologised to staff and suppliers for the problems. We have also made sure that special payments have been made to staff to avoid financial hardship and the schools finance team are providing extra support to schools.
“The county council and Serco have been trying to resolve issues as quickly as possible, we are making good progress and most of the backlog has now been cleared.
“Most organisations experience short-term problems when they implement any new system, because often the issues can’t be fully anticipated until the transition takes place. It would be unlikely that we would have found any suitable system that wouldn’t have experienced problems shortly after implementation.”
The council was unable to give details of exactly which suppliers and schools were affected.
Last year Serco won the £71 million contract to deliver customer service, HR and finance services for the council once the contract with old provider Mouchel finished. The deal was part of a bid to save £14m from the council budget in five years.
Labour councillor for Deeping St James Phil Dilks said he “personally warned” against handing the contract to Serco.
He added: “Now, just three months into the contract, the result is absolute chaos - with local businesses not being paid on time and some teachers not being paid at all.
“It’s a desperate situation and I’m today calling on the county council to impose penalty clauses now to get this mess sorted without delay.”