15 April 2011 | Angeline Albert
UK companies were paid 25 days late on average during the first quarter of 2011, according to research by Experian.
The global information services company has revealed no signs of improvement in the number of days bills were paid late by businesses when compared with the same period last year.
Based on its late payment index, the organisation said UK businesses still face challenging trading conditions and stressed the importance of companies monitoring suppliers’ and customers’ payment performance.
Severe weather affected payment performance across businesses of all sizes during the last few months of 2010 but despite a better climate in the next quarter, the figures did not improve.
Jason Mills, head of payment performance at Experian UK & Ireland said: “It has been a tough winter for businesses, particularly small firms, and companies are cautious about making any changes to their day-to-day financial operations.”
The largest businesses – those with more than 500 employees - are still the worst business group for paying bills late despite improving the length of time they took to settle bills to 34 days late in 2011’s first quarter, down from 36 days overdue the previous quarter.
Even the smallest companies who are seen as the fastest payers still failed to pay their bills under 20 days late and showed no change since the previous quarter.
Mills added: “Our analysis also shows that there is also a lesson for all firms in terms of creating and enforcing robust credit management and collection policies so that companies do not leave payment to chance. Goodwill goes a long way in business relationships, but ultimately firms need to pick up the money that they are owed promptly or they risk encountering serious cash flow issues.”
Businesses in the postal and telecommunications sector remain the slowest taking on average 46 days late. The agriculture, forestry and fishing industries and the oil sector were the only two to ensure bills were settled on average under 15 days late.