Payment performance improves in August among British businesses

News release

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Serj Heera
PR Manager, Business Information and Automotive
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payment performance IMPROVES iN AUGUST AMONG british businesses

Nottingham, UK, 28 September 2009 - August saw the biggest month-to-month improvement in the time it takes companies in the UK to settle bills since December 2007, according to the new monthly Late Payment Index from Experian^®, the global information services company. 

The average number of days businesses took to settle bills beyond agreed payment terms fell from 24.19 days in July to 23.40 days in August. 

Experian’s Late Payment Index reveals that it was not until March this year that payment performance began to show tentative signs of stabilising, before seeing the biggest month-to-month improvement in August in 21 months.

Despite an improvement on July 2009, Experian’s Index shows that businesses in the UK took five percent longer to pay their bills in August 2009 compared to August 2008. 

Key highlights from the Late Payment Index:

• Agriculture, forestry and fishing businesses paid their bills the fastest (11.98 days beyond terms).
• Businesses within the property sector were the slowest to pay their bills during August (39.14 days beyond terms).
• Businesses in the spirits wine and tobacco sector saw the most improvement from July to August (down 11.6 per cent)
• Whilst businesses in Greater London took the longest to pay their bills in August (27.29 days beyond agreed terms), they were actually the ones to see the biggest July to August improvement (down 4.7 per cent).
• In comparison to August 2008, businesses in the North East saw the biggest increase in the number of days beyond terms it took to settle bills (up 12.0 per cent).
• Businesses employing between 51 to 100 people saw the biggest improvement from July to August (down 4.2 per cent) and was the only category to see an improvement in late payment from August 2008 to August 2009 (down 2.7 per cent). 
• Businesses with 6 to 10 employees took the longest to pay their bills during August (25.33 days beyond agreed payment terms).

Bernie Grady, Data and Product Strategy Director for Experian’s Business Information division, said: “Given the economic climate, it is interesting to see that payment performance has shown some signs of improving over the last six months.    More businesses are relying on payment performance information to help them manage credit risk by using it as a valuable early indicator into a customer or supplier’s potentially worsening cash position.”

“Using this information, companies can change their terms of business for individual customers depending on the level of risk they could be facing. This kind of insight means that businesses can take steps to ensure their cash flow is strong enough to survive the late payment of a large invoice.”   

The monthly Late Payment Index tracks the number of ‘days beyond terms’ that are taken by businesses to settle their bills.  This is derived from Experian’s payment performance information – a database that tracks 20 million transactions per month, to indicate good and poor payment trends.  This payment performance information plays a pivotal role in Experian’s risk management products, such as The Risk Report and Ledger360.

Source: Experian

Source: Experian

Source: Experian