August saw the biggest month-to-month improvement in the time it takes UK companies to settle bills since 2007 according to figures from market watcher Experian.

Experian’s Late Payment Index revealed that firms took an average of 23.4 days beyond agreed payment terms to settle up in August, compared to 24.19 days in July. But despite the month-on-month improvement, companies were still taking five per cent longer to pay their bills in August 2009, compared to August 2008.

Firms with six to 10 employees took the longest to pay their bills last month (25.3 days beyond agreed payment terms); and businesses employing between 51 and 100 people saw the biggest improvement from July to August (down 4.2 per cent) and was the only category to see an improvement in late payment from August 2008 to August 2009 (down 2.7 per cent).

Companies operating within the property sector were the slowest to pay their bills during August (39.14 days beyond agreed terms) and businesses in the spirits, wine and tobacco sector saw the most improvement from July to August (down 11.6 per cent).

Bernie Grady, data and product strategy director for Experian’s Business Information division, said: “Given the economic climate, it is interesting to see that payment performance has shown some signs of improving over the last six months.

“More businesses are relying on payment performance information to help them manage credit risk by using it as a valuable early indicator into a customer or supplier’s potentially worsening cash position.”

“Using this information, companies can change their terms of business for individual customers depending on the level of risk they could be facing. This kind of insight means that businesses can take steps to ensure their cash flow is strong enough to survive the late payment of a large invoice,” Grady said.