One year after the Late Payment Act came into force, the percentage of large companies paying their suppliers late has risen to around 54% in the latest quarter from 44% in the previous three months, according to the latest Credit Management Research Centre quarterly review.However, payment by small firms and central government has shown some improvement, the survey shows. Overall, payment periods have remained stable over recent quarters for domestic customers though payment beyond the due date has steadily increased for export customers.The Act allows small companies to charge interest of 8% above base rate on bills unpaid after 30 days, unless prior agreement has been reached. The main reason for late payment by customers, in the experience of suppliers, is that it is an intentional policy, seen by 23% of those surveyed. Close behind are cash flow and financing difficulties, followed by disputes, queries and procedural/systems problems. A supplier can take a contractor to court if it ignores the demand for interest. Problems with large companies have been highlighted this year when, in March, business services group Rentokil Initial announced it would maintain a 60-day period while paying small suppliers up to 8% interest above base rates on unpaid bills. This controversial move was trumped just a few months later when retailer House of Fraser said it would impose a 75-day payment term.The CMRC survey also shows that more companies are using the legislation to secure payment with interest, with 5% of small firms making use of it compared with 2% six months ago.However, the number of firms saying they planned to use the legislation fell to 11% from 18% six months ago.
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