Payment practices deteriorate in the UK
British businesses believe the payment practices of their UK counterparts have deteriorated and rate foreign firms’ processes higher, according to an independent survey carried out.
With statistics taken from the ‘Atradius Payment Practices Barometer‘, a twice-yearly survey of 1,800 firms in nine different European countries, shows that 70 per cent of UK-based firms rate their foreign business partners’ payment practices as being good, very good or excellent, although there was a difference of 11 days between the payment duration of foreign customers and British payment terms.
Some 57 per cent of companies evaluated the domestic payment practices in Great Britain as being fair or poor whereas in Sweden and Denmark, 62 per cent of respondents rated domestic practices as good, very good or excellent. Foreign companies also highlighted the delays among British firms’ payments, with European business partners rating UK firms less positively than in summer 2008. The payment duration of British businesses increased to 50 days from 46 days in summer 2008.A total of 30 per cent of UK respondents said the availability of credit insurance has no impact on their customers’ ability pay, while only 11 per cent said it had a significant impact.
This survey also unearthed the differences in payment terms in Britain, Germany and Italy. While British companies use an average credit period of 32 days, Germany uses a credit term of 24 days and Italy is way out ahead with an average of 67 days.
Some 70 per cent of British companies said they were taking steps to protect themselves from payment risks, followed by 65 per cent of French and 64 per cent of Spanish respondents. Only 58 per cent of Swedish companies planned to take similar action.
Marc Curtis-Smith, Managing Director of Creditsure commented “Although the global economic downturn has negatively impacted payment practices in the UK and abroad, this impact has varied from country to country. It is essential for businesses to understand and thoroughly evaluate the different credit risks in the markets they are doing business, as miscalculation may result in serious cash flow problems further down the line.”