Large businesses improve payment performance in Q2

news release

Large businesses improve payment performance in Q2

But, improved performance across many UK regions offset by North West decline

Nottingham, 28^th July 2011 — The Late Payment Index from Experian®, the global information services company, reveals that large businesses in the UK improved payment performance by almost a day between Q1 and Q2 2011, spelling good news for small to medium sized firms who should see the benefits filter through to them.  The Index also highlighted that small and medium sized businesses saw their payment performance remain stable during Q2.

While large firms (with more than 500 employees) remained the slowest payers overall, they improved payment performance from 33.98 days beyond terms (DBT) in Q1 2011 to 32.9 DBT in Q2 2011.  Firms with 101 - 500 employees improved from 25.19 to 24.81 DBT quarter-on-quarter.  The gap of more than 11 days in payment performance amongst firms with more than 500 employees and those with 101-500 people that existed a year ago closed to just eight days in the last quarter.

At the smaller end of the scale, businesses with 1-2 and 3-5 employees improved marginally, quarter to quarter, from 20.10 days to 19.85 and from 22.23 to 22.07 days beyond terms respectively.  Compared to a year ago, however, the number of days taken to pay their bills is still higher.

Jason Mills, Head of Payment Performance at Experian UK & Ireland, said: “It is encouraging to see that for many firms, regardless of size, late payments did not slide further in Q2 2011.  However, it is still critical, especially for small businesses, to keep a close watch on cashflow.  Being able to predict and control your financial situation can prepare you for any shortfalls caused by late payments, while good forward planning can also help you spot opportunities for debt reduction.”

Source: Experian

North West sees decline in payment performance

Firms throughout the South West were most prompt at paying their bills, reducing days beyond terms to less than 17 days during Q2 2011.  Northern Ireland’s payment performance recovered somewhat after sliding during Q1 2011, returning to just over 19 days late – similar to its performance 12 months previous.

The North West was the only region that experienced deterioration on its performance, while all other regions either improved or managed to maintain the status quo during Q2 2011.  Performance slid from just under 29 days beyond terms during Q1 2011 to nearly 35 days beyond terms in Q2 2011.  When combined with Experian’s insolvency index – which shows that the number of North West businesses becoming insolvent in June rose 10 per cent year-on-year between 2010 to 2011 – this suggests that firms in the region may be currently experiencing greater financial pressures than usual.

Jason Mills said: “When examining payment performance, it’s important to hone in on deterioration in performance, as this is what typically indicates underlying issues within a particular region or sector.  The situation in the North West should be examined over the coming quarter to see if there is any improvement, or whether today’s data is indicative of a bigger challenge in the region.”

Source: Experian

Industry trends

Examining the different sectors shows that most industries experienced only minimal improvements or declines during Q2 2011.  One notable exception was the Spirits, Wine and Tobacco industry, which increased average payments by four days from the previous quarter.  The property sector also delivered an improvement in payment performance of one day over its Q1 2011 figure, bringing it back to a similar level seen twelve months previous in Q2 2010.

Both food and non-food retailing showed a slight decline on Q1 2011 performance, and it’s likely that the recent spate of retail sector insolvencies may cause this situation to worse in the months ahead. 

Notably, at the halfway point in the year, just five industries are currently outperforming their full year 2010 late payment figure – these are Banking and Financial Services, Insurance, Oil, Property, and Spirits, Wine and Tobacco.

Source: Experian

ENDS

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