Tuesday 26th May, 2015

According to research from Experian UK, businesses paid their overdue bills a day faster on average in the last tax year. 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.

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 (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."

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.