Business payment performance improves significantly in September

Largest businesses see the greatest improvement

September saw the biggest month-on-month improvement in business payment trends since December 2007, according to the latest Late Payment Index from Experian®, the global information services company.

On average, businesses in Great Britain were paying their bills 2.06 days earlier during September compared to August (from 23.60 to 21.54 days). The year-on-year comparison shows a 1.28 day improvement on September 2008 (from 22.82 to 21.54 days).

The month-on-month fall is the most dramatic since November to December 2007, when the number of days fell from 19.97 days beyond terms to 17.78 days.

Joe Myers, Head of Commercial Credit at Experian’s Business Information division, said: "There are a number of factors contributing to the vast improvement in payment performance among businesses. The Prompt Payer Register [1] is one factor that supports and encourages prompt payment and ethical business practice. This could be early evidence that the initiative is working.

"Payment performance is a key indicator of a business’s cash flow. Payment within agreed terms is favourable and this information is used to support credit scores and limits. Businesses need to be aware that a history of slow payment will have a detrimental effect on their credit score and ultimately the amount of credit available to them."

Key highlights from the Late Payment Index:

o The South East and Greater London regions saw the biggest year-on-year and month-on-month improvements in late payment. However, Greater London was also the region that had the second highest late payment record (24.47 days beyond terms).

o While the largest businesses (more than 501 employees) saw the biggest month-month improvement (down 13.5 per cent to 24.63 days beyond terms), they are still a long way from September 2008 levels of 15.44 days.

o Businesses with 26 to 50 employees saw the biggest year-on-year improvement, paying 18.52 days late.

o The IT sector saw the biggest improvement in both the year-on-year (down 43.7 per cent) and month-on-month (down 25.2 per cent) comparisons.

o The property sector overtook the postal and telecommunications sector as the sector with the worst payment record, paying bills 34.01 days beyond terms.

Payment days by Region and year on year performance

Scotland 22.51 -3.8

North East 24.23 0.9

North West 25.16 -1.4

Yorkshire 22.59 -1.1

Wales 21.23 -6.4

West Midlands 24.06 -5.2

East Midlands 20.67 -1.9

Eastern 19.58 -3.8

South West 17.07 -1.7

Greater London 24.47 -11.0

South East 17.46 -11.7

Grand Total 21.54 -5.6

Payment by employer size and year on year performance

1-2 19.72 -9.8

3-5 20.57 -0.3

6-10 21.25 -5.0

11-25 23.05 -5.4

26-50 18.52 -16.9

51-100 19.89 -3.6

101-500 22.36 -15.8

501+ 24.63 59.5

Unspecified 23.92 -9.1

Grand Total 21.54 -5.6

Payment terms by Industry and year on year performance

Extractive Industries 21.79 1.5

Oil 13.40 -36.3

Building and Construction 21.45 16.5

Building Materials 19.20 2.8

Chemicals Industry 16.82 -13.3

Diversified Industrials 19.62 3.9

Electricals 16.80 -12.9

Engineering 18.19 -7.1

Printing, Paper and Packaging 19.98 -6.7

Textiles and Clothing 25.27 -6.9

Breweries 19.17 -31.0

Spirits, Wine and Tobacco 19.20 32.8

Food Manufacturing 21.81 -6.5

Pharmaceuticals 18.83 0.6

Wholesaling 18.67 -9.8

Leisure and Hotels 29.00 13.0

Media 19.99 -13.0

Food Retailing 26.21 12.6

Non-Food Retailing 20.64 -0.9

Servicing/Repair 14.78 -11.7

Transport 21.21 -7.8

Utilities 30.12 -19.4

Postal and Telecommunications 33.56 -25.2

Agriculture, Forestry and Fishing 10.96 -10.7

Banking and Financial Services 25.48 -13.0

Health and Household 18.42 -23.5

Business Services 19.94 -19.5

Hiring and Leasing 22.55 5.4

Property 34.01 1.9

Other Services 17.96 -12.8

Plastics & Rubber 22.12 -4.2

Insurance 21.52 -19.7

IT 17.16 -43.7

Motor Traders 15.88 -4.2

Unspecified 32.33 -37.0

Total 21.54 -5.6