Payment trends enjoyed their biggest monthly improvement in almost two years last month with the IT sector being the biggest winner.
The Late Payment Index from credit services firm Experian finds that, during September, UK firms paid their bills an average of 21.54 days after the agreed terms. This represents an 8.7 per cent improvement on August's figure, meaning firms are now paying up more than two days earlier.
This is the largest monthly amelioration since December 2007 and also represents a 5.6 per cent reduction on the September 2008 figure of 22.82 days. The IT industry saw the biggest improvement of any sector with firms settling their September bills an average of 17.16 days beyond terms. This represents a decline of more than a quarter on August's figure and a 43.7 per cent fall annually.
The UK's promptest payers are in the agriculture, forestry and fishing industry, where bills where paid less than 11 days beyond terms. Businesses in the property sector were bottom of the pile, waiting an average of more than 34 days to cough up.
Firms based in the south west paid their bills an average of 17.07 days beyond terms, making it the best-performing region. This is more than eight days earlier than their north west counterparts, who are the country's tardiest payers.
Joe Myers, head of commercial credit at Experian’s Business Information division, said: “There are a number of factors contributing to the vast improvement in payment performance among businesses. The Prompt Payer register is one factor that supports and encourages prompt payment and ethical business practice. This could be early evidence that the initiative is working.
“Payment performance is a key indicator of a business’s cash flow. Payment within agreed terms is favourable and this information is used to support credit scores and limits. Businesses need to be aware that a history of slow payment will have a detrimental effect on their credit score and ultimately the amount of credit available to them.”
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