An increasing number of UK companies have been reported paying their supplier bills late. Whilst late payment of bills is often used as a cheap way of avoiding corporate cashflow problems, companies with defined benefit pension schemes need to think carefully about possible PPF levy implications.
John Broome Saunders, Actuarial Director at BROADSTONE, said “Companies need to consider the impact of later payment on their D&B failure score, since whether companies pay their bills on time is a key component of this score. Even a small reduction in the score can have a large impact on the size of the PPF levy that all companies with defined benefit pension schemes are required to pay.”
Broome Saunders believes that companies with good scores may understate the impact of possible levy increases. “Companies who have historically had good scores – and therefore have paid a low levy – may not fully appreciate that a few late payments could be enough to double the size of the levy.”
John Broome Saunders