Overdue business payments reach a two-year high

The number of late payments owed to businesses in the UK has hit a two-year high, according to a new report.

The Quarterly Overdue Payments Report from trade credit insurance firm Euler Hermes looked at reported debtor payment incidents from more than 250,000 businesses across 17 major industry sectors.

These incidents covered overdue payments from a number of different causes, including late payments from client companies, defaulted payments, insolvency, country court judgments and credit insurance claims.

The report found that the number of overdue payments reported had increased in the final quarter of last year in 14 of the 17 sectors when compared to two years ago.

The UK sector experiencing more delays than any other last year was the construction industry, which accounted for almost a third (31%) of all overdue payment incidents reported.

Disputes are often to blame for payment delays in this sector and are generally more common than in other industries, but there was still a 27% year-on-year rise in the number of overdue payments incidents during 2015. In addition, payment delays rose steeply towards the end of the year, with a 12% increase in the final quarter compared to the 3 months from July to September.

The most affected sub-sectors within the construction umbrella were general contractors, civil engineering providers and installers of wiring and fittings.  The latter were impacted disproportionately by large projects running over budget.

Reports of delayed debtor payments also rose by 12% in the final three months of 2015 compared to the previous quarter. This was the highest rate for eight consecutive quarters or two full years.

The report also found that around one in six (17%) businesses reported difficulties in meeting their own payment obligations on time during 2015. This was up from 10% in 2014.

The average number of seasonally adjusted overdue payment incidents reported had fallen by 11% year-on-year in 2014 compared to 2013, before increasing by 8% last year.

By Phil Smith

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