You can't trust les rosbifs

Another blow to national pride - apparently French businesses are much more reliable than British ones...

Last Updated: 31 Aug 2010

British businesses are four times more likely to have overdue debts than their French counterparts, according to research by CreditSafe. The credit information group discovered that two-thirds of UK businesses have reported late payments (i.e. later than the period set out in their Ts&Cs) compared to just 16% of French businesses. So unless they’re just less willing to own up to bad debts, it appears that French businesses are either a lot nicer to each other – or a lot better at debt collection…

In fact, the only consolation for disappointed Brits is that when the French get bad debts, they do it (as you’d expect) in style. For this 16%, the average amount owned was a whopping €60,000 – over half as much again as the £29,000 average debt of a British company similarly afflicted. But this also highlights the most interesting aspect of these figures: in France, big companies are much more likely to have bad debts than small ones (hence why the sums involved are usually larger). In fact, just one in ten French businesses with fewer than 10 employees reported late payments, while in the UK small companies are just as likely to be affected as big ones.

It’s clear from these figures that bad debt is a problem across the board in the UK. Compared to their French counterparts, British businesses were twice as likely to report lower profits or an inability to pay bills on time, and far less likely to commit funds to marketing and raw material purchases. Creditsafe reckons it’s just become an accepted part of business life in the UK, as companies hang on to their cash for as long as possible to stay liquid and earn extra interest. ‘We have seen late payments become a part of the business culture here in the UK,’ says marketing director David Knowles.

But all these problems will be even more marked for SMEs, who are usually much more vulnerable to cash flow problems arising as a result of late payments. ‘It’s often less cash rich smaller companies that end up losing out,’ as Knowles puts it.  In other words, entrepreneurs may find life a lot easier on the other side of the Channel – which hardly bodes well for the Government’s enterprise agenda. Sacre bleu.

In today's bulletin:
FTSE up despite US bail-out flop
Tesco beats crunch with big sales hike
Sky gets regulatory double whammy
Consultants suffer in Tory council tax freeze
You can't trust les rosbifs

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