Late payment culture on the rise

The study, conducted by Experian, found that the average payment period has increased by 0.5 days to 58.4 days since the start of September 2003.

Large companies were the biggest offenders in terms of late payment, with the average time taken to settle bills increasing by 0.7 days to a massive 78.5 days in the past six months.

The rise in payment times, so damaging to many small businesses, is despite laws introduced by the government aimed at speeding up tardy payers.

Companies can now take late paying clients to court and claim compensation based on the amount of goods they have provided.

However, various rules introduced to combat the problem have done little to stop late payment, with the average time taken to settle bills actually rising by 0.5 days since 1998.

The Experian research revealed that the UK compared badly with other European nations in terms of late payment, with firms in Sweden taking an average of eight days, 17 days in Germany, 10 days in France and 21 days in Italy.

Phil Cotter, managing director of Experian, said that the UK has a longstanding culture of late payment that is damaging to business, employment and our reputation as trading partners.

“Not only is our overall payment period longer than most of our European competitors, we also pay further beyond agreed terms than all other European countries.

“Late payment is a misguided and short-term measure, which ultimately wastes valuable resources and leads to more bad debt, less trust between companies and higher costs for consumers.

“Many companies are still failing to take basic steps to minimise the risk of late payments.

“Companies who adopt the latest techniques in credit risk management combined with a commercial approach to payment collection during the sales cycle, can significantly improve their cash flow and profit by reducing late payment and minimising bad debt,” he said.