British companies slow to pay up
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Your support makes all the difference.THE controversy over British companies' late-payment records is fuelled by a survey that claims they are the second-worst in Europe, writes Roger Trapp.
Earlier this year, a report from Grant Thornton, the accountancy firm, suggested that UK organisations had shorter payment periods than the European Community average. But research released last week by Intrum Justitia, which claims to be Europe's leading debt collection company, paints a much bleaker picture.
In what appears to confirm anecdotal evidence that the situation has worsened recently, the organisation says that payments made by UK respondents to the survey were on average 24 days late. Although it adds that 'payment habits are deteriorating almost everywhere in Europe', Intrum Justitia says only the Italians are worse than the British. It has submitted the results of the survey - the latest to reveal the growing problem of late payment in Europe - to the European Commission, along with proposals for an EC Directive to deal with the situation.
This would involve interest on overdue payments at 5 per cent above the prevailing bank rate, compensation to creditors for the administrative costs of collection, streamlined procedures to collect debt and strict regulation of debt collectors.
Bo Goranson, chief executive of Intrum Justitia, said: 'The need for legislation, and the support for it, is clear. The survey shows that those countries which have the most extensive legislation on late payment - Sweden, Finland, Norway and Germany - also have the shortest payment periods.' But the report shows payment periods are deteriorating fast in Germany.
Mr Goranson said that the average of 24 days overdue for all UK payments was 'appalling', given that it included good payers, many of which would pay before the due date.
He pointed out, however, that while intentional late payment was responsible for nearly half all delays, companies could take steps to help themselves.
For instance, most checked the creditworthiness of clients before they started trading with them, but 'surprisingly few' bothered to check regularly after this, even though the great majority of losses come from existing clients. This may be why 'debtor in financial difficulties' is given as the reason for late payment in almost a third of cases.
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