UK businesses are still taking 60 days to pay their bills, almost exactly the same as 12 months ago, new research by Experian has revealed.
Seven years after the introduction of The Late Payment of Commercial Debts (Interest) Act, which was intended to speed up payments, the average time UK companies take to pay their bills is still two days longer than before the legislation was introduced.
Experian’s findings are based on the payment patterns of 366,633 companies, the largest sample ever analysed. The report shows that large companies have extended the time they take to pay their suppliers - usually much smaller than they are - even further, taking on average 80.6 days compared to 80.3 days a year earlier.
Large companies take an average of 21.4 days longer to pay their bills than small companies and 20 days longer than medium-sized companies.
Says Richard Lloyd, managing director of Experian’s Business Information division: “Insolvencies in the UK last year hit their highest level since 2002. It has been proven time and again that late payment by suppliers plays a major part in the failure of some companies and, of course, a rapidly deteriorating payment trend is very often a warning sign that a company is in financial difficulties and heading towards insolvency.
“Companies owe it to their shareholders and employees to ensure that they protect themselves from customers that simply pay late and those that are suffering cash flow problems by checking the payment record of prospects and customers - even if they’ve been customers for years.
“Circumstances change and previous research by Experian has shown that up to half of bad debts come from long-standing customers.”