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UK firms are taking longer to pay bills

UK businesses are now settling their bills almost four weeks after their agreed payment dates according to research by Experian.
UK firms are taking longer to pay bills
The global financial risk analyst says firms are using extended payment terms as a form of short term funding, and reports this rising trend is leaving some small firms waiting as long as five months for payment from the point of invoice for goods and services.

Days Beyond Terms (DBT) relates to the terms within which an account must be paid, (e.g.30 days, 60 days) and any period after this time is known as DBT.

At the end of July 2007, UK businesses settled their bills on average 16 days after agreed payment terms, but by the end of July 2008, this DBT figure had increased to 25 days.

July 2008 figures showed UK construction firms on average paid up 21 days after the agreed payment terms, up from 14 DBT days in July 2007.

Building materials manufacturers paid 23 DBT days after agreed terms. This figure has also risen from 15 DBT days in July 2007.

Businesses in the energy sector are now paying their bills on average 37 days beyond agreed terms, up from 24 days in July 2007.

Experian’s DBT data is derived from its payment performance information, sourced from a database that tracks £12 billion of transactions each month.

Tony Pullen, managing director of Experian’s business information division, said: “As our payment performance data shows, businesses are not only taking longer to settle bills after agreed terms, but they are also extending those terms so that where they may have previously paid 30 days from invoice, they are now pushing this out to 60 or even 90 days.

Pullen added 'The problem for smaller suppliers is exacerbated because they are often under pressure to settle their own bills quickly to secure goods and supplies essential to their business.”
22 August 2008

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