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Businesses struggling to meet payment deadlines, says Atradius study

By CreditMan Thursday, September 30, 2010

Businesses across the world continue to struggle to meet payment terms, according to the latest Payment Practices Barometer by leading trade credit insurer Atradius.

The twice yearly study which reviews payment behaviours of almost 3,971 businesses around the world, found that even countries not directly hit by recession, such as China and Poland, were suffering the impact of trading with business in other less robust economies. Late payments or worse, payment defaults, continue to affect the financial health of otherwise stable businesses. Respondents cited the need to take specific measures to protect and correct their own cash flow and in some cases to postpone payments to their own suppliers.

Overall, more than 50% of the respondents of the survey received payments from customers late without prior notice and around 50% received requests for an extension of the payment term.

In Great Britain, key findings were:

· 59% of respondents reported that customers had requested extended payment terms over the past six months

· 57% of respondents reported delayed payment from customers without prior agreement

· 46% were asked for an increase in credit

· 42% of the invoices of British respondents were paid late

Marc Henstridge, Head of Risk for Atradius UK and Ireland said:

”As an economy, the toughest challenge for UK plc is that of the unexpected. It’s increasingly evident that payment behaviours are shifting. In some cases, we are seeing more supply chain credit in use which shows businesses are supporting one another in the face of straitened credit supply from other sources, which is a positive. But there are also reports of some fairly tough payment experiences. Our study shows that, on average, in around half of all transactions, businesses are experiencing credit issues of one kind or another. This is particularly hard on smaller businesses supplying to fewer customers where getting paid on time is a case of sink or swim. We urge businesses not to be complacent and to protect themselves against the unforeseen - it is critical to our economic recovery that businesses keep their cash flow safe. Unexpected payment delays can have a devastating knock-on effect up the supply chain, which, in a worst case scenario can force bankruptcy.”