More legal news
09 August 2001
Legislation giving small firms the right to charge interest to companies for not paying bills within 30 days has failed to reduce the average time taken for debtors to pay up.
A study of 4,100 firms' payment audits found that the average wait was 46 days, which has not changed for three years. A quarter of companies took more than 60 days to pay suppliers in the past year, according to the Federation of Small Businesses.
The Late Payment of Commercial Debts (Interest) Act 1998 allows small firms to charge interest at 8 per cent above the existing base rate on debts incurred from buyers.
However, research into attitudes to the act, commissioned by the group, found that although there was a huge awareness among large businesses of its existence, 83 per cent said small firms have never used the act against them.
The findings were disappointing, said Phil Mellor of analysts Dun & Bradstreet, which collected the data, as payment times should be quicker in the benign conditions experienced recently. "Next year, suppliers can expect another two or three days to be added to the average," he warned.