UK businesses settle bills nearly four weeks beyond agreed terms, new Experian survey reveals.

With businesses already using extended payment terms as a form of short term funding, this trend means that some smaller businesses could be waiting as long as five months for payment from the point of invoice for goods and services supplied months earlier.

At the end of July 2007, the time it took for businesses to settle their bills after agreed terms stood at 16 days. However, by the end of July 2008, this Days Beyond Terms (DBT)* figure had increased by nine days to 25 days. Experian’s DBT data is derived from its payment performance information, gained from a database that tracks 20 million transactions per month - the equivalent of £12billion of transactions each month - to indicate good and poor payment trends. 

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. 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.”