Faster bill payments smooth cash flow for UK businesses

Companies settled overdue invoices a day quicker in the last tax year. Businesses in the North West and food retailing industry showed the greatest improvement in payment performance

Nottingham, UK, 21 May 2015 – 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.”

Business size (employees)

DBT  (on average) 2014/15

DBT (on average) 2013/14

Change in days (+/-)

1-2

20.58

21.16

-0.58

3-5

21.34

22.64

-1.30

6-10

21.19

22.15

-0.96

11-25

21.60

22.24

-0.64

26-50

22.91

23.32

-0.41

51-100

23.81

23.88

-0.07

101-500

24.11

24.77

-0.66

501+

34.18

35.25

-0.99

National Average

24.29

25.28

-0.99

Regional focus

Companies in the North West of England showed the greatest improvement in payment performance, settling overdue bills 3.78 days faster at 30.44 DBT. However, it was still the region which took the longest time to pay its bills, compared to Northern Ireland, where businesses only went 15.93 days beyond terms on average before settling invoices. Scotland also saw the number of days it takes to pay bills decrease by 1.64 days, taking its DBT on average to 22.04. Only the North East witnessed an increase in the time it took to pay bills, by 0.43 days. 

Region

DBT  (on average) 2014/15

DBT (on average) 2013/14

Change in days (+/-)

Scotland

22.04

23.68

-1.64

North East

25.07

24.63

+0.43

North West

30.44

34.22

-3.78

Yorkshire

23.75

24.61

-0.85

Wales

23.42

23.86

-0.44

West Midlands

22.61

23.53

-0.92

East Midlands

23.39

24.33

-0.94

Eastern

26.24

26.82

-0.58

South West

17.93

17.97

-0.03

London

28.28

29.26

-0.98

South East

20.82

20.95

-0.13

Northern Ireland

15.93

16.99

-1.06

Industry performance

The food retailing industry improved its performance the most in the last tax year by reducing the time it takes to settle bills by 3.15 days, falling from an average of 30.59 DBT in 2013/14 to 27.44 DBT in the last tax year.

In the last tax year, the agriculture, forestry and fishing industry was the best at paying bills, only going 9.98 DBT on average, whereas the postal and telecommunications industry was the poorest performing, taking 44.44 DBT.

Region

DBT  (on average) 2014/15

DBT (on average) 2013/14

Change in days (+/-)

Extractive Industries

27.13

23.63

3.51

Oil

17.94

17.37

0.57

Building and Construction

21.18

21.67

-0.49

Building Materials

19.11

19.69

-0.57

Chemicals Industry

19.91

20.97

-1.06

Diversified Industrials

22.08

22.26

-0.18

Electricals

21.04

20.10

0.94

Engineering

20.23

18.30

1.93

Printing, Paper and Packaging

17.67

18.57

-0.90

Textiles and Clothing

24.24

26.55

-2.30

Breweries

19.93

16.54

3.39

Spirits, Wine and Tobacco

10.23

8.95

1.27

Food Manufacturing

20.89

22.78

-1.89

Pharmaceuticals

20.09

20.08

0.01

Wholesaling

20.23

22.70

-0.37

Leisure and Hotels

28.86

34.28

-2.22

Media

24.04

25.44

-1.40

Food Retailing

27.44

30.59

-3.15

Non-Food Retailing

24.46

26.39

-1.86

Servicing/Repair

18.12

17.77

0.35

Transport

23.62

27.27

-1.17

Utilities

27.38

26.84

0.54

Postal and Telecommunications

44.44

44.77

-0.33

Agriculture, Forestry and Fishing

9.98

10.44

-0.46

Banking and Financial Services

26.18

26.61

-0.43

Health and Household

23.57

23.09

0.48

Business Services

22.65

22.95

-0.30

Hiring and Leasing

23.94

24.75

-0.87

Property

27.66

29.33

-1.74

Other Services

20.00

21.05

-1.05

Plastics & Rubber

22.48

23.01

-0.53

Insurance

20.93

21.91

1.49

IT

25.33

24.28

1.05

Motor Traders

19.70

21.71

-2.00

 How businesses can reduce the risk of late payments:

  • Status check: Is the business you are dealing with real? Four out of ten companies which start up never actually go on to trade. Telephone and email correspondence with a new customer should be backed up by checking its address is real in person or on Google Street View.
  • Thorough research: Running a credit check on a potential customer or supplier will reveal their credit status, trading history and help you make an informed decision about the appropriate line of credit to extend to them in the future.
  • Remain watchful: Conditions can change rapidly, so a business which was a prompt payer yesterday may run into financial difficulties tomorrow and affect your cash flow. Monitor customers on an ongoing basis and take a proactive approach to dealing with potential problems with payment.
  • International outlook: Don’t treat trading abroad like a holiday. Take similar precautions when exporting as you would do when doing business within the UK.

BusinessIQ

The latest analysis has been compiled using some of the most comprehensive business data on the market. This data powers BusinessIQ, an easy-to-use, integrated online platform that enables credit professionals to accurately and efficiently manage their business customers and all the risks and opportunities associated with them - from acquisition stage and throughout the life cycle of the relationship. This includes giving firms an early warning system on customers that might be getting into financial difficulty.

ENDS

 

Notes to the editor:

Data provided in this press release is from 01/04/2013 to 31/03/2015 to reflect the tax years 2013/14 and 2014/15.

Follow us on Twitter @ExperianMIQ for our latest news, views and insight.

Contact:

Ade O’Connor

PR Manager

Credit Services

T: 44 (0) 115 992 2645 | M: 44 (0) 7583 085796

E:  Ade.o'connor@experian.com 

  

 

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