Micro-businesses lead the way on bill payments

The smallest firms are setting an example to big businesses when it comes to paying invoices...

Last Updated: 31 Aug 2010

The smallest firms are the quickest at paying their bills, according to credit checking agency Experian: its research shows that the average business with one or two employees took 18.1 days (after agreed terms) to pay its bills in January, much faster than the overall average of 20.74 days. Now you might argue that neither of these figures sounds particularly impressive. But on the plus side, at least companies seem to be getting faster (or at least, less slow) at paying their debts. If that means they’re feeling a bit more confident about their cashflow, it’s good news for everyone...

Experian’s January Late Payment Index suggests that firms are paying their bills two-and-a-half days quicker than they were in the same month of 2009. And by the looks of it, the bigger a business, the slower they pay – indeed, the slowest of all were large firms with over 500 staff, who still take 24.33 days (beyond terms) to cough up. Given that they’re (generally speaking) likely to have stronger cash positions, that’s disappointing, to say the least. Although it could be worse – this time last year they were typically 31 days late. Who knows how many suppliers went to the wall as a result?

The figures also show big differences between the regions. The Scots were the fastest payers of all at 16.27 days late, a 13% improvement on last year (just goes to show you shouldn’t believe the stereotypes, particularly with Yorkshire also in the top four..). London firms have also raised their game: they paid up 23.3 days late, 6% faster than last year, as a result of which they’re no longer the slowest payers; that dubious honour is now reserved for Northern Irish companies. Industry-wise, extractive companies were the teacher’s pets, at 10.16 days late, while motor traders were bottom of the class, at almost 33 days. (Still, they’ve had problems of their own, right?)

All of which is interesting enough in itself – but the key point is that across the board, people seem to be paying up faster. That suggests companies are feeling a bit less inclined to defer payment as a way of preserving cash – which in turn presumably means they’re a bit more confident about their finances. Little acorns, and all that...

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