Late payment still rife among UK plcs says FSB

The Federation of Small Businesses (FSB), in association with The Credit Management Research Centre at Leeds University’s Business School, has launched the 2006 Private Sector Payment Performance League Tables as an online database. These tables, as in previous years, show how the UK’s publicly quoted companies perform when it comes to paying invoices on time, using the data included in their own annual reports.

Unlike the league tables of past years, the website version (www.paymentscorer.com) will be kept up to date on a daily basis. It also contains analytical tools, so that comparisons between years, companies and sectors can be made, and links to further information on the businesses in question from Companies House. Currently the tables have over 5,000 companies ranked from all sectors. Further information and tools will be added in due course.

However, over 2,200 companies, including some of the UK’s biggest business names, did not report the actual number of days they take to pay on their invoices in contravention of reporting regulations.

By sector average, Agriculture takes the longest average time to pay (64 days) and Financial Services are the quickest (28 days).

Despite late payment legislation, small businesses are reluctant to take large firms who do not pay on time to court. This is because the large firm will inevitably not renew the contract if the small business resorts to legal action. In many cases a small business depends on one large contract for its future and so it will not risk this through the courts despite the fact that late payment can also threaten the firm’s viability.

The FSB's National Policy Chairman John Walker said:

"Late payment of invoices is a complex issue but in simple terms an invoice that is not paid on time can spell the end for a small business. There can be no excuse for paying invoices several hundred days late.

"These league tables show that some firms are failing miserably to honour their obligations and are using their size to get away with it. Other firms do not comply with the legal requirements and do not report their payment times at all.

“The findings in the league tables provide further evidence that more resources, and perhaps more powers, need to be given to Companies House to police late payment reporting legislation.

"Small firms will be interested in using these tables before entering into contracts to supply large firms with goods and services. They are an excellent source of information. I hope that the large firms who have been identified as poor payers will raise their game to a much higher level whilst I also congratulate those identified as good payers.”

One way to avoid the late payment trap is to hire a company to take on your outstanding invoices on your behalf for a percentage - click here for more information on Factoring and Invoice Discounting.