20 July 2007 | Paul Snell
Companies now take longer to settle their bills than at any time since legislation was introduced in 1998 to curb late payment.
UK firms take an average of two months to pay supplier bills, according to a study carried out by analysts Experian, an increase of two days since its last survey in November 2006. Large firms are the slowest payers, taking 81.5 days. SMEs take around 61 days.
Jo Howard, marketing director at Experian's business information division, said: "Many companies are 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."
The electricity industry was found to be the slowest sector, paying in 72.1 days. This is a rise of 7.5 days compared with six months ago. Only the paper and timber industries, of the 29 sectors examined, reduced their payment times, both by about a day.
"Companies seem to be happier to accept longer payment terms when business is going well, but will take a tougher stance when they begin to feel the pinch," Howard said. "There may be an upcoming battle between the two forces, as companies seek to retain more cash and slow payments in the face of higher interest payments, while suppliers seeing lower levels of growth will be less prepared to accept extended payment terms."
* SM is running a feature on payment terms in the 2 August issue