Larger companies lag behind in payment performance stakes

UK companies are now the second fastest at paying their bills, in Europe.

However, it is the largest companies which are still the latest payers.

Scrutiny of payments by more than 1.3 million European companies within the six, major European economies, by Dun & Bradstreet, revealed that not only is the UK second only to Germany in the prompt payment of bills, but that its performance is an improvement on past years, with bills now being paid on average, earlier. However, the survey also showed that “the smaller the company, the faster they pay.”

In addition, the Federation of Small Business’s (FSB) Private Sector Performance League Tables 2001 – based on the company reports of over 4,000 UK plcs – showed that the payment performance of the slowest paying plc is getting worse. The average length of time it takes a plc to pay its suppliers has remained static at 46 days for the last three years.

FSB press officer Stephen Alambritis commented: “A small company could be dependent for up to 50% of its income, say, from one large supplier. A large company could owe payments to a lot of small companies [in that situation].” The late payment of these bills could determine whether the small business goes under or not. He continued, “The FSB is not opposed to the Right to Statutory Interest, it’s a law, [but] on it’s own it will not clear up the situation. We also need the tables, and a basket of legislation.”

D&B Senior Analyst Philip Mellor commented, however, that “These are the first real signs that the Government’s legislation, allowing smaller companies to charge interest on late payment, is after a few years playing a part in changing the culture paying debt in the UK.” The stable economy in the UK was mentioned as another factor.

The Forum of Private Business’s’ Head of Research, Jim Redman, agrees, saying, “large companies are more aware of the credit processes and are generally getting better. The interpretation of the legislation has always been woolly. The application of [the Statutory Right to Interest] has always been an optional, although legal, requirement.”

Large companies also put the average time they take to pay debts in their report and accounts. So before taking on a large company as a customer it’s worth checking out how quickly they’re likely to pay.

To obtain a copy of the Private Sector Performance League Table 2001, contact the FSB by phoning 020-7592 8100. The full list can also be found on the Better Payment Practice’s own website at www.payontime.co.uk.

With thanks to Lloyds TSB Success4Business.

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Late Payment

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