UK businesses improve their late payment performance in 2009

At the end of 2009 UK businesses had significantly improved the time it takes them to settle their bills, according to the latest Late Payment Index from Experian®, the global information services company.

During December 2009, businesses were paying their late bills an average of 20.88 days after agreed terms - an improvement of over two and a half days from 23.54 days in December 2008.

It was only until August 2009 that UK businesses turned their payment performance around and began to see improvements each month. The biggest improvement in payment performance came from the UK’s largest businesses (501+ employees) – a reduction of 36.10 days late in January 2009 to 28.97 days by December 2009

However, compared to 2008 payment performance in 2009 was marginally worse - from 21.51 days in 2008 to 22.79 days after agreed terms in 2009.

Joe Myers, Head of Commercial Credit at Experian’s Business Information division, said: "The fact that country’s biggest businesses reduced the time it takes to settle their bills by nearly 20 per cent is a significant turnaround. Companies are more aware now than ever that their credit score is affected by their payment behaviour. While this enables them to negotiate improved terms as well as raise credit from alternative sources or suppliers, it also means that other businesses can make a more informed decisions about working with them."

Highlights for 2009:

o Businesses in the South West were the fastest payers on average during 2009, paying their late bills 18.01 days beyond terms. However, this was a 6.8 per cent increase on 2008 when South West businesses paid their bills 16.87 days beyond terms.

o London businesses maintained their position as the worst payers during 2009, paying their bills 26.95 days beyond terms.

o Northern Ireland was the only region to see an improvement in payment performance of 15.3 per cent during 2009, from 24.04 days in 2008 to 20.37 days.

o As in 2008, businesses with 26 to 50 employees continued to be the ones that paid their late bills the quickest – 18.94 days.

o Businesses in the postal/telecommunications sector were the worst payers of 2009 (39.01 days), followed by property (36.44 days) and utilities (33.40 days). However, of the three, postal/telecommunications was the only sector to see an improvement since 2008 (down 11.2 per cent).

o Businesses in the agriculture/forestry/fishing, servicing/repair and motor traders sectors paid their late bills the fastest (11.63 days, 15.20 days and 16.31 days).

o IT businesses saw the biggest improvement of the year – 20 per cent fall from 29.20 days in 2008 to 23.37 days in 2009.

o The businesses to see the biggest deterioration on payment performance were in the leisure/hotel sector – up 26.9 per cent from 22.53 days in 2008 to 28.60 days in 2009.