UK business are waiting nearly four weeks beyond agreed payment times before settling their debts with suppliers, the latest research from research group Experian shows.

The facts: 

According to the group’s annual check on payment times, the average business pays suppliers 25 days after the date they agreed. That’s nine days longer than this time in 2007 when the figure stood at 16 days.

It said some smaller businesses, who occasionally fall off the radar of big business customers, are waiting five months from the time they invoice for work carried out to the time they receive payment.

Experian blamed the credit crunch, which is about a year old, claiming that firms were holding on to money for as long as possible to avoid cash-flow problems. The group tracks 20 million transactions per month; about £12bn’s worth of deals.

Businesses in the construction sector were the worst offenders, delaying payments for 38 days passed agreed dates on average; that’s up fully 18 days on 12 months ago. Food, drink and tobacco companies were also singled out for increasing payment times by 15 days on last year.

They said:

Tony Pullen at Experian said: “Businesses are not only taking longer to settle bills after agreed terms, but they are also extending those terms so that where they may have previously paid 30 days from invoice, they are now pushing this out to 60 or even 90 days.  

He added: “The problem for smaller suppliers is exacerbated because they are often under pressure to settle their own bills quickly to secure goods and supplies essential to their business.”

We say:

Getting paid on time is tricky if your customers aren’t sympathetic to your cash-flow needs. You could dangle payment law in their faces, but do you want to aggravate the people who pay your wages?

The best thing to do is make payment details as clear as possible and send regular reminders to clients who ‘forget’ to pay. Threatening to fine customers could lose you more money than it earns.

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By News Desk  on   Aug 22,2008

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Keywords

late payment    customers    Experian    money    cash-flow    small business   

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