Late payment in decline

The problem of late payment of subcontractors in the construction industry is in decline, according to a wide ranging survey of small and medium sized firms by accountant Grant Thornton.

And the UK is still one of the best places in Europe to get paid quickly, shows the survey of 40,000 businesses Europe-wide.

According to the study, less than a third of the businesses believe that the speed of invoice payment is getting worse, compared with 47 % last year and as many as 67% in 1993.

The third annual European Business Survey has been carried out by Grant Thornton International and economic consultancy Business Strategies. It is the largest of its type in Europe, covering 17 countries.

It shows that small and medium sized enterprises (SMEs) in the UK have maintained their position as the third fastest to settle invoices - at 48 days - behind Denmark (33 days) and Germany (42 days). The 48-day period is one day quicker than last year while the European average is 63 days, down from 66.

But in Germany over half the respondents think the situation is still worsening, in stark contrast to UK optimism.

David Musker, head partner at Grant Thornton's Property and Construction Unit, said: 'It is encouraging to see that payment periods are continuing to improve in the UK and that our situation is markedly better than the EU average. Nevertheless, late payment remains a major problem for many companies whose trading terms typically require settlement in 30 days.'

The survey also looked at how much debt the companies had written off in the year. One in five UK SMEs wrote off more than 1% of invoiced turnover last year. This compares favourably with the Europe average where more than a third wrote off that much debt.