Small firms lead the way on prompt payments
Photo Credit: Mukumbura via Compfight cc

The UK’s smallest firms continue to settle their debts faster than anyone else, according to the latest figures from Experian.

In the last financial year, ending March 2015, companies with just 1-2 employees paid up on average 20.58 days beyond terms, when invoices went overdue at all.

While that’s a three-week wait for payment, it’s the best performance on putting right overdue payments .

Companies with 3-5 employees took 21.34 days beyond terms (DBT), an improvement over the previous year of 1.3 days – and that’s the biggest improvement of any group.

However as usual, the biggest firms perform the worst, and those with 501 or more people in their workforce took an average of 34.18 DBT to pay, an improvement of less than one day over 2014.

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.”

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