Late payment times improve for UK plc

Third consecutive quarter of improving payment performance for UK firms, Experian data suggests

UK firms paid their bills earlier in the second quarter of 2012 than they did in Q2 2011 according to the latest late payment figures from Experian.

In Q2 this year, firms were paying their overdue invoices 23.3 days after agreed terms, compared to 25.2 days during the same period in 2011, and 24.5 days during Q1 2012.

In reference to the IT sector, firms paid their bills an average of 32.6 days after agreed terms, compared with 22.3 days in Q2 2011.

The biggest payment improvement came from firms at the larger end of the scale, the market watcher claimed.

Firms with 50 to 100 and over 501 employees paid their bills nearly two days faster than in Q2 2011, while firms with 101 to 500 employees paid nearly two and a half days faster than in Q2 2011.

Max Firth, UK managing director for Experian's Business Information Services division, said: "This is the third consecutive quarter of improving payment performance, which means that cash flow among firms is getting better.

"Much of this improvement has been led by the UK's largest businesses. There is, however, only so much improvement that can take place among these firms. The very nature of the way large businesses are structured – hundreds of suppliers, multi-sites, multi-departments, stringent processes – makes it impossible for them to pay as fast as their smaller more flexible counterparts," he said.

"It is vital that smaller firms think about their collection strategies, and take on board some of the strategies employed by their larger counterparts to help ensure they get paid on time. This includes monitoring the payment performance of their customers to ensure early signs of deterioration are caught before it is too late."