The UK’s smallest businesses are the most reliable when it comes to paying bills on time, data from Experian revealed today. Late payments are an old bugbear for SMEs across the country, and one they have increasingly campaigned against lately. Now it seems that the smallest businesses are setting an example.
UK firms with less than two employees saw a significant improvement in their payment performance during the first quarter of this year, paying their bills more than 4.5 days faster than the same period in 2012. They were paying an average of 27.9 days after agreed terms compared to 32.5 days during the same period last year.
All other business sizes, however, saw an increase in the time taken to pay outstanding invoices, with the UK’s largest businesses (those with more than 501 employees) seeing their payment performance slow by more than two days in the first three months of 2013, standing at 33.9 days beyond terms compared to Q1 2012 when they paid on average 31.7 days late.
Max Firth, UK managing director for Experian’s Business Information Services division, said: “The marked improvement by the smallest firms is certainly encouraging, but the decline among other businesses is a concern. There is still caution among many firms when it comes to offering business lifelines, such as trade credit and favourable payment terms, and this is impacting on the payment performance of businesses across the UK. Through careful monitoring of suppliers and customers, businesses can combat this lack of confidence, serve to ease cash flow issues and grow.
Across the country
The biggest improvements in payment performance during Q1 came from Northern areas of the country Scotland, Northern Ireland, North West of England and Yorkshire. Scottish firms paid their overdue bills 1.7 days faster than in Q1 of 2012 at 23.26 days. Firms in Northern Ireland improved their payment performance by more than one day, with late payments now standing at 17.10 days beyond terms. Both the North West and Yorkshire saw their payment performance improve by around one day, falling to 34.17 days for firms in the North West and 23.86 days for firms in Yorkshire.
Businesses in the South West paid the fastest at 17 days beyond terms – hitting their best payment performance rate since Q3 2010, when it dropped to 16.7 days.