Delays in payment fail to improve

Click to follow
Payment times for UK small-to-medium sized enterprises (SMEs) failed to improve last year, despite the establishment of a code of practice on the issue by the Confederation of British Industry and a growing economy, according to a survey published today by accountants and business advisers Grant Thornton.

The result - part of the firm's fourth annual study of SMEs across Europe - shows that the average payment period for UK companies has risen slightly, from 48 to 50 days. The European Union average is 61 days.

The findings are likely to intensify the pressure on the Government to deal with the problem through legislation, since they come days after deputy prime minister Michael Heseltine admitting "stringing along creditors" in the early days of his business career.

Last week, two former Conservative ministers urged a tightening of the law on the day that Labour MP Jon Owen Jones introduced a Private Member's Bill calling for a statutory right to interest on late payments.

The same day saw the publication of a survey by the Forum of Private Businesses, whose 2,858 members tend to be smaller than those surveyed by Grant Thornton, showing an average 77-day wait for payment, while an NOP poll for Business Pages found 70 per cent of small businesses identified late payment as a serious problem. Small firms minister Richard Page is due to publish the results of a review later this year.

The NOP finding is echoed by the Grant Thornton survey, which discovered that the percentage of UK SMEs believing that speed of payment was worse than before had risen for the first time in five years, from 30 per cent to 37 per cent.

Moreover, just 12 per cent of SMEs say they are paid within the typical UK terms of trade payment period of 30 days.

However, Andrew Godfrey, head of growth and development services at Grant Thornton, does not believe that the statutory right to interest is the answer.

"For instance, Spain and Italy already have legislation to force payment of interest on late debts, and yet they are still among the slowest payers in our survey. In Italy the average wait for payment is 84 days," he said.