Back

Payment Gap Narrows in 2012

The payment gap narrows between UK’s smallest and largest firms according to the Late Payment Index from Experian. In 2012 it is reported that UK businesses paid their bills, on average, more than one day earlier than they did in 2011; which is based on firms paying their invoices, on average, 24.66 days after agreed terms in 2012, compared to an average of 25.70 days after agreed terms in 2011.

Scotland made the biggest improvement making payments on average, 2.6 days earlier in 2012, this being 24.89 days after agreed terms. Yorkshire followed closely behind, by making payments on average nearly two days earlier in 2012, this being 24.37 days after agreed terms. Wales, West Midlands and East Midlands all also made considerable improvements by making payments a day earlier. The North West, on average, remained the region paying their bills later than the rest of the UK, this still being despite their payment improving by 1.24 days in 2012.

Out of the five largest industries, four saw improvement in their payment performance in 2012, these being, building/construction, property/hotel and leisure, business services and IT. Taking into account all of the sectors, those that saw the best improvements were those that were usually some of the latest payers e.g. leisure/hotels and food retailing, property and postal/telecoms, who saw payments being made more than two days earlier in 2012 than in 2011.

Whilst this is encouraging, with the improvements being led by those businesses with more than 100 employees, the average payment time remains slower than the level seen before the peak in 2011.

Therefore it is still extremely important to maintain credit checks and keep an eye on the payment trends of your customers, as making payment later than they normally would do, could be an early warning sign of cash flow problems. Should this be the case, or should you require any advice regarding recovering overdue invoices, please do not hesitate to contact me to discuss the options available to you and how we can assist.

I can be reached via email: lisa.blair@lblaw.co.uk or by telephone on 01952 291222.