Payment performance worsens
Construction companies are paying their bills over 23 days later than the agreed payments terms – up two days on the previous quarter – according to global information services company Experian.
Experian’s analysis shows that firms from all sectors paid their bills 25.2 days late on average during the first quarter of 2011. Businesses within the postal and telecommunications sector remain the slowest to pay their bills; despite improving by one day since Q4 2010, their overall payment performance remains 46.1 days – well over a month late. Health & household firms took slightly longer to pay their bills – 22.6 days compared to 21.4 in Q4 2010 – while the oil and agriculture, forestry and fishing industries were the only two to achieve payment performance of less than 15 days late. The property industry late payment is around 34 days.
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.
“Small firms, in particular, must be mindful that continued poor payment performance can affect their creditworthiness, which may in turn make it harder for them to secure finance or win new customers.
“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. By monitoring late payment trends, business owners are able to make smarter decisions about who they do business with, but also about how they manage their existing customers.”
Firms throughout the South West continue to lead the way in terms of payment performance, and the region remains the only one in the UK to pay its bills under 20 days late on average.