The Christmas big freeze has been blamed for everything from retail woes to putting the brakes on the UK economy but, according to Experian, it also led to an explosion in late payments to businesses.
The company’s Late Payment Index shows that while 2010 as a whole saw a slight improvement – from 22.81 days late in 2009 to 22.58 days – this deteriorated during the final quarter, with firms paying their bills 25.70 days late; the highest average since Q3 2007.
Perhaps unsurprisingly, large businesses, those with more than 500 employees, remain the ones taking the longest to pay their bills. On average they are more than five weeks late (36.74 days) in paying bills, meaning the now standard 90 days actually slips to more than 126 days – nearly four months.
But the biggest decline in performance during Q4 occurred within the small to medium enterprise (SME) sector. In particular, firms with 100 employees or less paid their bills an average of 22.24 days late, three and a half days slower than during the equivalent period in 2009.
When it comes to industry sectors, postal and telecoms providers continue to be the slowest to pay their bills, at an average of nearly a month and a half late (47.19 days) during Q4 – twice the average. The property sector and leisure and hotels sector also struggled, with payment times averaging well over 30 days in both cases.
Experian UK & Ireland head of payment performance Jason Mills said: “Although overall payment performance improved slightly during 2010, the final few months of the year have highlighted that businesses still need to be cautious.
“The bad weather played a key role in this downward trend with many firms closing as employees struggled to get into their offices. A late payment from one small business can easily lead to a cashflow problem in another, particularly when their corporate relatives take even longer to pay.
“It is important that companies take more time to assess the credit ratings and payment performance of prospective customers and suppliers before doing business with them to ensure they are completely aware of any likely impact on their own business.”
