Late payment culture shows no signs of abating

Large companies are the worst offenders when it comes to making late payments - more than five years after the government brought in legislation to tackle the problem - according to a survey conducted for business consultancy group Experian.

For larger companies, the average payment period has increased from 72.1 days in 1998 to 78.5 days in November 2003 – an increase of 6.4 days.

The average payment period by companies in the UK, at 58.4 days, is longer than when government legislation was introduced in 1998, an average increase of half a day.

Compared to six months previously, the survey found the average length of time prior to payment for:

• medium-sized companies had decreased by 0.5 days to 57.9 days
• and small companies had increased by 0.6 days to 57 days.

Phil Cotter, Managing Director of Experian’s Business Information division, said: “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."

Experian advise that contracts should clearly state when payments are due, avoiding common areas of confusion, such as when the payment is due - 30 days after the invoice date or the delivery date.

Companies should adopt clearly defined complaints procedures and service levels for resolving complaints can help to resolve disputed debts quicker. Measures such as payment by Direct Debit and discounts for early payment should also be considered to help reduce the problem.

Experian said that many organisations were ignoring these points during the sales process.

The UK delays payment on average by more than any other major European economy – by 27 days compared to eight days in Sweden, 17 days in Germany, 14 days in Switzerland, 10 days in France and 21 days in Italy.

(SP)