Late payments not better for battling firms

Company collapses are likely to proliferate in coming months as the number of businesses delaying payment on their bills continues to increase, heaping more pressure on the struggling small business sector.

The latest figures from Dun & Bradstreet show an alarming deterioration in payment terms to 53.2 days for small businesses, from a previous reading 51 days, three months earlier.

Given the standard repayment term is 30 days, this lengthening of the due payment repayment is likely to push more companies to the wall.

By contrast, in 2003 the average term was 45 days and before GST was introduced in 2000 it was 41 days.

Payment trends are known to be an accurate leading indicator of an economic correction. Indeed, the last economic decline was preceded by a blowout in trade payments. The concern is that as the global credit market again tightens, and funding is harder to obtain, the impact of later payments will have painful consequences for many firms.

According to the latest Dun & Bradstreet Trade Payments Analysis – examining the ability of firms to pay their bills, and pay them on time – the number of payments falling within the standard 30-day term dropped 16.5 per cent quarter-on-quarter.

via Late payments not better for battling firms.

Strange Random Payment Quote:

The payment of debts is necessary for social order. The non-payment is quite equally necessary for social order. For centuries humanity has oscillated, serenely unaware, between these two contradictory necessities.” – Simone Weil (French social Philosopher, Mystic and Activist in the French Resistance during World War II. 1909-1943)

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