Monday 29th April, 2013

A report by Dun & Bradstreet (D&B) has revealed that the average time taken by British businesses to pay bills has improved by two days throughout 2012 to an average of fifteen-days late against agreed payment terms. British Businesses have been steadily paying bills later in recent years, from thirteen days late in 2006, peaking at seventeen days in 2011. The results suggest many businesses have adapted to operating in today’s sluggish economy and are managing their cash flow more confidently.

The report highlights the potential impact of the recently updated EU Payments Directive (Directive 2011/7/EU) that sets the basis in law for suppliers to reduce risk and protect cash flow. This legislation makes it easier for businesses to pursue payment, with debtors being forced to incur interest and pay an administration fee if they fail to pay for goods and services within 60 days for business and 30 days for public authorities.

The average fifteen-day late payment times for British businesses over the past year are similar to that of France, Spain and Italy. However, this is nine days slower than Germany, which has the shortest average payment period of the countries. The payment period in Portugal is seven days longer than the UK. In general, payment performance across all UK sectors improved moderately over the past year with the exception of the retail sector, where payment time increased substantially to nineteen days during 2012.

Philip King, CEO, Institute of Credit Management said: "There has been a noticeable shift in the response of British businesses to the issue of payments in recent months, with the updated EU Directive and various government initiatives bringing the late payment debate out into the open. We have seen that smaller businesses want to learn about best practice and an increase in larger firms signing the Prompt Payment Code as their commitment to paying suppliers within agreed terms that are fair and reasonable".