Firms paying bills quicker – even big companies behaving better

Figures Show Firms Paying Bills Quicker | Middletons Solicitors | Andover Solicitors 

Figures released by the credit reference agency, Experian, show that companies in the UK paid their bills 1.3 days earlier in the third quarter of 2012 than they did during the same period in 2011.

Experian’s late payment index shows that between July and September this year, companies took 24.88 days beyond the agreed terms to settle a payment. In 2011, the figure was 26.11 days for the same period.

The most significant improvements came in the food industry. Food retailers settled payments 29.15 days late on average. That’s 5.06 days faster than during the same period in 2011. Food manufacturers paid their bills 22.91 days after the agreed terms, which is 4.16 days earlier than a year ago.

The gap between how long it takes large and small companies to settle invoices has also changed over the last few years. This year, larger companies have been taking only 12 days longer than small companies to pay their bills whereas in 2009 they took nearly 20 days longer.

Max Firth, UK managing director of Experian’s business information services division, said: “This is a sign of improved behaviour amongst 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.”

While the figures for the third quarter of 2012 are an improvement on the same period in 2011, they are slightly worse than in the second quarter. Bills were paid 23.45 days late between April and June 2012, which is 1.42 days quicker than in July to September.

Mr Firth warned that this could be a sign of potential problems ahead. “The Q2 to Q3 change, however, does indicate potential cash flow issues in recent months. For firms trying to keep their books balanced, having a full and early view of 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.”

Please contact Charles Goodbody in our Warminster office on 01985 214444 or cgoodbody@mulaw.co.uk if you would like more information about debt collection and credit control issues.