UK businesses are still taking two months to pay their bills, almost exactly
the same as a year earlier, new research released this week by analyst Experian
Based on the payment patterns of 366,633 companies, the findings showed that large companies have extended the time they take to pay their suppliers even further and take an average of 80.6 days, compared with 80.3 days a year earlier. Small companies take 59.2 days, on average, to pay their bills, while medium-sized companies now take 60.7 days, up 0.7 days on 2004. As a result, the average payment period for UK companies, irrespective of size, is 60.1 days.
Richard Lloyd, managing director of Experian’s Business Information division, said: “Insolvencies in the UK last year hit their highest level since 2002. It has been proven time and again that late payment by customers 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."
He continued: “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.”
The slowest paying industry overall was the Electricity industry, which takes an average of 69.8 days to pay its bills, while the Property sector came a close second with 69.4 days.
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