Bills paid later as economy slows

COMPANIES are taking longer to pay bills as the economy slows down, with large companies the worst offenders, according to a survey of 212,000 businesses published today.

The survey, conducted by Experian, the database and credit rating group, reveals that the average payment period has slipped by 0.9 days since six months ago, despite recent legislation designed to speed up invoice payments. But while small- and medium-sized firms still take an average of 55 days to pay up, large companies take 72 days to settle their bills, two days more than six months ago.

Banks are the worst offenders among large companies, taking 82 days to pay their invoices, 16 days more than in May, while water companies form the worst individual industry.

Large increases were also observed in the pharmeutical sector, where payment took an average of 59 days, five more than earlier in the year, while large food retailers now take 73 days to settle accounts, an increase of four days.

According to Peter Brooker at Experian, large companies only give their own customers an average of 37 days' credit, while taking twice that time to settle their own accounts.

"This means they are in effect using their suppliers to fund a month's free credit. Many of their suppliers are much smaller and suffer from cash-flow problems as a result," he said.

Food retailers, who give their customers a mere 1.1 days' credit, take more than two months to pay their suppliers.

Mr Brooker added: "It is no coincidence that company failures are on the increase again, and that one of the main reasons is poor cash flow because of the late payments of invoices."