The Cost of Late Payment
Since legislation was introduced to help combat late payment back in 1998, businesses are now taking longer than ever to pay their bills than ever before. Research performed by information provider Experian revealed that by and large businesses are taking over two months to pay their bills. The worst offenders are the larger firms who are taking as long as 81 days to pay a full 3 weeks longer than smaller firms (based on the payment patterns sample of in excess of 435,000).
Jo Howard, marketing director of Experian's business information division, said: "Of course, many companies, whether they are large, medium or small, are very diligent about paying their invoices within the terms agreed with their suppliers. But there is still a hardcore that clings stubbornly to the culture of late payment of invoices and the latest figures indicate that this is getting worse. The late payment battle is far from over and we predict very interesting times ahead."
Adding to the concerns is the research findings by Creditsafe, the business credit information expert, that points to a staggering 3.3m, or 75%, of British companies that are failing to protect their cash flow by using business credit reports, despite increasing numbers of company liquidations. The findings show that even if companies are using these services it is not often enough with 26% having not used one for more than a year. This lack of concern is putting medium-sized (SME) business owners and managers and their companies at considerable risk given a quarter of SMEs in Britain fail as a result of interruptions to business cash flow. Combine this with extended and cash flow restricting late payments and you have a recipe for financial disaster.
