92 DAYS – time it takes for China to pay UK suppliers

BRITISH exporters selling to China will face the longest wait for payment, according to new research.

The findings come as Britain hopes to secure its own independent trade deal with Beijing as part of its plans for a post-Brexit economy.

The tardiness of Chinese companies in paying up was matched only by those in Greece, with firms in Italy also close to the top ranking for slow payment.

The research from the world’s largest trade credit insurance company, Euler Hermes, found that Chinese firms took an average of 88 days to pay bills in 2015, a figure beaten only by Greece and matched by Italy.

However, the group’s forecasts predict that Chinese firms will take even longer in 2016, with average bills taking 92 days, while Greek businesses will manage to cut their payment waiting time to 89 days. Italian firms are expected to take an average of 86 days to pay this year.

The findings emerged from the survey of 27,300 companies around the world, analysing the gap between when a company delivers its goods or services and when it gets paid for them – a measure known as ‘days sales outstanding’.

Slow payment by customers is a particular problem for smaller firms, which may lack reserves to cope with late payers. It is a bugbear frequently cited by small firms supplying larger companies.

The global average has remained steady at 64 days, but this varies markedly between countries, with the differences getting more pronounced, according to Euler Hermes. Over recent years, it has found the gap widening, with payment delays declining in developed economies, and appearing to get longer in emerging markets.

Ludovic Subran, chief economist at Euler Hermes, said: ‘The global stability in days sales outstanding hides two trends. In 2010 companies in emerging economies took an average four days longer to pay bills than firms in advanced economies.

‘In 2015 that gap had widened to nine days. In 2016 we expect that gap to extend to 12 days.’

The world’s fastest payers, according to the study, are Austria, where bills are paid on average in just 44 days; New Zealand, with an average of 46 days; and the Netherlands, with an expected average of 46 days. The average payment time of companies in the UK was 52 days.