Fast to ask, slow to pay

3 September 2009

04 September 2009

Large US businesses expect the fast payment of bills but are slow to pay suppliers, a Wall Street Journal (WSJ) study reveals

Companies with annual revenues of over $5 billion (£3.1 billion) took an average of 55.8 days to settle suppliers' bills in the second quarter of 2009, but collected payment in just 41.

Smaller businesses with annual sales below $500 million (£307.8 million) waited 58.9 days for payment, yet settled invoices in an average of 40.1.

"Big firms can force their terms on suppliers and customers. If you're a small business you have no bargaining power and have to take what's given," said Sung Won Sohn economics professor at California State University.

According to the report, the disparity was evident before the economic downturn but has intensified in the recession. REL Consultancy, a division of US advisory firm the Hackett Group, conducted the research for the WSJ.

l The UK's Federation of Small Businesses said earlier this month that some larger firms are extending payment terms up to 120 days. It said that about 4,000 smaller suppliers in the UK were forced out of business last year because of late payments.

SMsep2009

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