Later payments could put firms at risk of insolvency

British businesses are being put at risk of needing insolvency and restructuring assistance by customers who refuse to stump up payments in a punctual manner.

According to new data from global information services company Experian, late payments among UK companies have risen by almost a day during the third quarter of 2011.

The risk of needing the services of insolvency practitioners was highlighted by the fact that the typical bill between British firms was settled an average of 26.13 days late in July, August and September.

This is in comparison to the 25.26 days recorded during April, May and June, showing just how resilient English, Scottish, Welsh and Northern Irish enterprises are required to be.

Smaller firms were actually less guilty of late payment than their larger rivals, with micro businesses employing one or two people limiting the increase in their late payments to half a day.

This represents the smallest increase of any business size recorded during the three months to the end of September.

The guiltiest parties seemed to be in the largest firms – those employing more than 501 people – which increased their late payments from 32.79 last quarter to 34.89 in this most recent one.

Experian UK & Ireland head of payment performance Jason Mills noted that the figures illustrate how tough it can be for businesses.

“With the average time it takes to settle bills worsening in the last three months, it underlines why it pays to keep a close eye on suppliers’ and customers’ payment performance,” he said.

“Nowhere is this more evident than in the north-west of England, where our analysis shows that businesses are paying suppliers nearly 37 days late, taking 8 days longer than the second worst late paying region.”

Meanwhile, Experian recently reported that micro businesses in the north-east of England are showing the biggest rise in insolvency rate of all British firms.