Late Payments Index – The annual roundup of 2012: Improvements led by larger businesses

The year drew to a close with the average late payment figures during Q4 falling from 25.97 days beyond terms in Q4 2011 to 25.63 days.

The largest improvements during 2012 were led by businesses with more than 100 employees, paying on average 2.25 days faster than in 2011.  This played a key role in helping the gap between the payment performance of the UK’s smallest businesses and the largest companies narrow further in 2012. Micro businesses with 1-5 employees paid on average 20.95 days late in 2012, whilst large firms with over 100 employees paid on average 27.15 days late – a gap of 6.2 days compared to 7.9 days in 2011.

Max Firth, UK Managing Director for Experian’s Business Information Services division, said: “The gap between payment performance of the largest and the smallest businesses narrowing is predominately as a result of more rapid payment behaviour amongst larger businesses.

“The overall improvement in payment performance is encouraging, though the average payment speed remains slower than the level seen prior to the 2011 peak.

“Understanding how quickly clients are paying their invoices provides firms with an early warning sign of potential issues, enabling businesses to plan accordingly for any debt or work with firms that are showing signs of struggling, to manage any potential loss.”

Source: Experian

UK breakdown

Scotland made the greatest improvement, falling by 2.6 days on average in 2012 to 24.89 days beyond terms.  Yorkshire was a close second falling by nearly 2 days in 2012 down to 24.37 days.  In addition, Wales and the East and West Midlands all made significant improvements falling by more than a day.  The regions showing least improvement were those that already had faster than average payment performance.

The North West remained the region to pay their bills on average later than the rest of the country, but it did see its payment performance improve by 1.24 days since 2011 from 34.01 days to 32.77 days.

Source: Experian

Sector trends

Four out of the UK’s five largest industries – business services, building/construction, property/hotel and leisure saw improvements in their payment performance during 2012, with only IT experiencing a slight increase of 0.74 days.

Looking across all sectors, many of those that saw the most significant improvements were those that were traditionally some of the latest payers, such as property, postal/telecoms, leisure/hotels and food retailing.  They all saw their average payment speeds falling by more than 2 days.

Source: Experian

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