Late payment message getting home as invoices are being paid faster

UK businesses paid their overdue bills a day faster on average in the last tax year, according to data from Experian, the global information services company.

The national average of days beyond terms (DBT) it took companies to settle invoices dropped by 0.99 days to 24.29 between April 2014 and March 2015, helping businesses to manage cash flow.

The UK’s smallest businesses were the quickest to tackle overdue invoices, as companies with one or two employees settled bills 20.58 DBT. Businesses with three to five employees showed the greatest improvement, paying bills 1.3 days faster at 21.34 DBT. Although the largest businesses, those with a workforce of 501 or more, took the longest to settle bills at 34.18 DBT in the last tax year, they improved payment performance in line with the national average at 0.99 days.

Max Firth, Managing Director for Experian Business Information Services, UK&I, said: “The improved payment performance shown by businesses of all sizes in the last tax year is an encouraging sign for the economy. Cash flow is especially important to SMEs – late payments can hinder their profitability and growth prospects, while also having a knock-on impact on suppliers.

“Although invoices are broadly being settled faster, businesses should not be complacent and need to monitor customers to identify any potential problems at an early stage. They can then discuss payment terms where appropriate and have more control over their cash flow.”