Study by ACE shows that small firms now paid in 90 days compared to 78 in 2011

Dr Nelson Ogunshakin

Dr Nelson Ogunshakin

Clients are taking longer to pay small and medium-sized consultants, the Association of Consultancy and Engineering (ACE) has said.

An ACE benchmarking study of the UK and European consultancy and engineering sector found that small firms are being paid in 90 days this year compared with 78 days last year.

ACE warned this could drive companies out of business.

However, the study of 55 firms also found improving revenue per fee earner among companies with fewer than 50 staff. This rose 9% to an average £79,100 per fee earner for small companies with a similar figure found at larger firms.

Dr Nelson Ogunshakin, the chief executive of ACE, said: “These figures show there is a long way to go to ensure clients pay promptly for the work our industry does, even at a time when financial constraints have hit small companies hard.

“However, rising income per fee earner shows how companies are striving to extract the maximum value from the talent the industry has. This figure may rise further in the years ahead if our education system doesn’t develop the talent needed to eventually take the baton from an older generation of engineers.”

The study also suggested that small companies, despite long payment terms, generate higher revenue per £1 of employee cost than large firms. The ACE said this was largely thanks to lower spending on both fee earning and support staff, which helped small firms to earn an a higher average margin than their larger competitors.