Late payments by British companies have increased to the highest level in three years, indicating a weakening of trade, according to a new report.
The Late Payment Index by Experian, the global information services company, revealed that there had been a significant decline in payment performance among businesses of all sizes towards the end of 2010 as the bad weather took its toll.
The analysis shows that while the average payment performance for 2010 as a whole saw a small improvement from 22.81 days in 2009 to 22.58 days, payment performance deteriorated during the final quarter of 2010, with firms paying their bills 25.70 days late – the highest recorded average since Q3 2007.
Jason Mills, head of payment performance at Experian UK & Ireland, 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.”
Large companies – those with 500 plus employees, remained the ones taking the longest to pay bills. However, the biggest decline in performance during Q4 2010 occurred within the small and medium sized enterprise sector, with payments arriving three and a half days slower than during the equivalent period in 2009.
© Crimson Business Ltd. 2011