The retail industry currently enjoys the fastest payment times of all UK industries, according to a new report from credit insurer Atradius, with an average of just 17 days passing between the invoice’s issue to its payment.
The Autumn 2011 Payment Practices Barometer surveyed over 5,200 companies across 27 European countries and additionally discovered that UK businesses set an average sales payment term of just 26 days in the domestic market and 25 days for export sales. This is 10 and 11 days below the European average respectively.
Interestingly, larger firms set much longer payment terms than their smaller counterparts, requesting payment 32 days after the receipt of goods compared to just 21 days for smaller firms.
Early settlement discounts are also more common in the UK, with 44% businesses offering these initiatives as opposed to a European average of 37%.
Marc Jones, head of sales for Atradius UK, said: “As this report shows, businesses are now much more likely to adapt their payment terms depending on the sector of the buyer they are dealing with. If it is a sector that has been badly impacted in the economic climate, businesses are remaining astute about what payment terms they extend to them compared to those who have performed more robustly.
"Company standard terms are cited as one key reason, together with trade relationship with the customer and industry standard terms, for adapting domestic and foreign trade payment terms. Credit capacity of the customer, type of product sold and the competition have also been key factors in setting credit terms and balancing company policy with other external factors."