Britain’s leading companies are damaging small firms by failing to speed up the time it takes to pay bills and invoices, a new report has revealed.
Annual research conducted by the Federation of Small Businesses (FSB) revealed no improvement in the time it takes giants such as BAA, BT, Next and Cable and Wireless to pay suppliers.
The report found that the average time it takes a PLC to pay its bills stands at 46 days – the same figure as the past four years.
The figure is disappointing considering the number of rules which have been introduced to help stamp out late payment, which causes thousands of small firms to fold every year.
Entrepreneurs can now take debtors to court to claim compensation, although previous research has shown that small firms are reluctant to take up this right due to the time and costs involved.
Worryingly, the FSB’s research showed that fewer companies are reporting on their payment practices – breaking government regulations.
All PLCs and large subsidiaries have to state in their annual reports the average length of time it takes them to pay their bills. However, this year’s statistics contain information on just 2,706 firms, compared to 4,100 in 2001 – a 66 per cent drop.
The FSB said that more needed to be done to protect small firms by forcing large companies to pay up on time.
John Walker, policy chairman at the FSB, said that he estimates that one in four of businesses that fail do so because of interruptions to their cashflow.
“With around £20 billion outstanding at any one time, it is not surprising that every small business has experienced the difficulties that late payment can cause.
“I am particularly concerned that fewer PLCs are reporting their payment performance. An important element of the basket of measures needed to improve payment performance is transparency.
“Companies House should be squeezing the information out of secretive companies,” he said.
