It’s Late Payment Index revealed businesses in the food retailing and food manufacturing sectors led the industry-wide improvement. Food retailers paid their bills 29.15 days after agreed terms between July and September this year compared to 34.21 in the same period last year.
Food manufacturers paid their bills 22.91 days late compared with 27.07 days late in the third quarter of last year.
Overall, UK businesses paid their bills nearly 1.3 days earlier than last year in the third quarter. Firms paid their overdue invoices 24.88 days after agreed terms, compared with 26.17 days in 2011.
Encouraging to see
Max Firth, UK md of Experian’s business information services division, said: “The figures show that late payments have significantly dropped compared with the same time last year and it’s encouraging to see that the gap between payment performance of the biggest and smallest businesses has continued to close.
“This is a sign of improved behaviour among larger businesses. Understanding how quickly clients are paying their invoices provides firms with an early warning sign of potential issues, so that they can plan for any debt or work with firms that are struggling.”
Late payment or insolvency
Firth added that the change between the second and third quarter indicated “potential cash flow issues in recent months”. He added: “For firms trying to keep their books balanced, having a full and early view of the all the factors that could impact their business, whether it is late payment or insolvency, could be the difference between staying afloat and going under.”
Also, the difference in late payments between the UK’s smallest businesses and largest companies has been getting smaller since the final quarter of last year. The gap has narrowed from nearly 20 days during 2009, down to under 12 days this year. The improvement has been led mainly by businesses at the larger end of the scale and remains broadly consistent for third quarter this year, said the firm.
Firms across the country have either seen an improvement in the third quarter or remained stable, with the biggest improvement coming from the North West, where overdue invoices fell from 36.75 days to 32.66 days.
