Payment performance slides in Q4 2010
Bad weather impacts payment times within the UK’s small business sector
Nottingham, 3 February 2011 — The Late Payment Index from Experian®, the global information services company, reveals that a significant decline in payment performance occurred among UK businesses of all sizes towards the end of 2010 as the bad weather took its toll.
Experian’s analysis shows that while the average payment performance for 2010 as a whole saw a small improvement from 22.81 days in 2009 to 22.58 days, payment performance deteriorated during the final quarter of 2010, with firms paying their bills 25.70 days late - the highest recorded average since Q3 2007[1].
Businesses with 500+ employees remain the ones taking the longest to pay their bills, but the biggest decline in performance during Q4 2010 occurred within the small to medium enterprise (SME) sector. In particular, firms with 100 employees or less paid their bills an average of 22.24 days late in Q4 2010, three and a half days slower than during the equivalent period in 2009.
Jason Mills, Head of Payment Performance at Experian UK & Ireland, said: “Although overall payment performance improved slightly during 2010, the final few months of the year have highlighted that businesses still need to be cautious. The bad weather played a key role in this downward trend with many firms closing as employees struggled to get into their offices. A late payment from one small business can easily lead to a cashflow problem in another, particularly when their corporate relatives take even longer to pay.
“It is important that companies take more time to assess the credit ratings and payment performance of prospective customers and suppliers before doing business with them to ensure they are completely aware of any likely impact on their own business.”
Other insights from Experian’s analysis include:
Days beyond terms Q4 2010 |
Days beyond terms Q4 2009 |
Days beyond terms Full year 2009 |
Days beyond terms Full year 2010 | |
1-2 |
20.47 |
17.91 |
19.86 |
18.85 |
3-5 |
22.97 |
19.41 |
20.75 |
20.67 |
6-10 |
22.33 |
18.67 |
19.97 |
19.86 |
11-25 |
21.89 |
18.33 |
19.50 |
19.53 |
26-50 |
22.25 |
18.74 |
20.14 |
20.00 |
51-100 |
23.50 |
19.85 |
21.41 |
20.88 |
101-500 |
26.26 |
23.91 |
25.48 |
24.61 |
501+ |
36.74 |
35.87 |
38.96 |
35.74 |
Unspecified |
34.69 |
26.29 |
30.55 |
29.40 |
National Average |
25.68 |
22.11 |
22.81 |
22.58 |
Source: Experian
North West heads the late list
Late payments differ greatly from region to region; in the South West, for example, companies typically pay their bills ten days earlier than London-based firms. Yet it is the North West that saw the highest average late payment times during Q4 2010, at 29.43 days.
Compared to Q4 2009, Scotland recorded the biggest increase in late payments, its average rising almost six days to reach 28.08 days. It was also the worst hit by the severe weather at the end of 2010. Northern Ireland and the South West are currently the only two areas of the UK where average late payment is less than 20 days – this compares to a year ago when half of government regions registered 20 days or less.
Regional performance varies according to size of business. For firms of 100 employees or less, the West Midlands performed worst, with these SMEs taking 25.04 days to pay their bills. Other regions where late payment problems were particularly pronounced for small businesses included the North East (26.09 days for firms of 51-100 employees, 26.65 days for firms of 11-25) and Yorkshire (25.38 days for firms of 3-5 employees).
Government Region |
Days beyond terms Q4 2010 |
Days beyond terms Q4 2009 |
Days beyond terms Full year 2009 |
Days beyond terms Full year 2010 |
South West |
18.84 |
16.26 |
18.02 |
16.86 |
South East |
20.95 |
16.88 |
19.06 |
17.96 |
Eastern |
24.29 |
18.86 |
20.87 |
20.67 |
N Ireland |
19.18 |
18.59 |
20.58 |
19.59 |
East Mids |
25.72 |
19.90 |
21.56 |
21.96 |
Wales |
25.24 |
20.78 |
22.36 |
22.51 |
Yorkshire |
27.46 |
21.90 |
23.15 |
24.04 |
North East |
26.67 |
23.29 |
24.62 |
24.25 |
West Mids |
28.17 |
23.31 |
25.23 |
24.81 |
Scotland |
28.08 |
22.11 |
23.17 |
25.01 |
London |
29.28 |
23.68 |
26.98 |
25.84 |
North West |
29.43 |
24.36 |
25.81 |
26.58 |
Source: Experian
Industry trends
Businesses within the postal and telecommunications sector continue to be the slowest to pay their bills, at an average of 47.19 days during Q4 2010 – nearly twice the average time recorded. The property sector and leisure & hotels sector also struggled, with payment times averaging well over thirty days in both cases.
Honing in on the SME sector it is possible to see the major inconsistencies that exist from firm to firm within specific industries. For example, utilities businesses with between 26-50 employees paid bills 15.08 days late on average, yet in the same industry firms between 51-100 employees took over twice as long (39.20 days). Similarly, in leisure and hotels, firms with 50 employees or less took 30.02 days on average to pay bills, yet for slightly larger firms (51-100 employees) this figure shrank to just 20.05 days.
Industry Sector |
Days beyond terms Q4 2010 |
Days beyond terms Q4 2009 |
Days beyond terms Full year 2009 |
Days beyond terms Full year 2010 |
Agriculture, Forestry and Fishing |
12.01
|
9.80 |
11.39 |
10.34 |
Banking and Financial Services |
29.03
|
25.99
|
29.86
|
27.29 |
Breweries |
23.18 |
18.59 |
22.39 |
17.91 |
Building and Construction |
23.15
|
20.50 |
21.45
|
21.29 |
Building Materials |
23.26 |
19.41 |
19.83 |
21.02 |
Business Services |
23.26 |
18.79 |
22.14 |
20.29 |
Chemicals Industry |
21.96 |
17.03 |
18.45 |
18.53 |
Diversified Industrials |
24.68 |
19.53 |
20.21 |
21.03 |
Electricals |
20.92 |
16.85 |
18.91 |
17.42 |
Engineering |
21.07 |
17.04 |
17.98 |
17.78 |
Extractive Industries |
26.11 |
23.09 |
23.72 |
23.65 |
Food Manufacturing |
26.52 |
20.42 |
22.34 |
22.06 |
Food Retailing |
32.68 |
25.60 |
25.77 |
30.08 |
Health and Household |
21.38
|
17.58
|
20.29 |
18.89
|
Hiring and Leasing |
27.62 |
21.60 |
22.22 |
23.87 |
Insurance |
20.69 |
20.66 |
23.02 |
20.42 |
IT |
22.43 |
16.23 |
23.56 |
17.56 |
Leisure and Hotels |
34.70 |
27.45 |
27.67 |
31.00 |
Media |
25.55 |
19.94 |
22.17 |
21.84 |
Motor Traders |
19.98 |
15.23 |
16.30 |
17.24 |
Non-Food Retailing |
26.02 |
19.70 |
20.99 |
22.62 |
Oil |
14.47 |
13.07 |
18.58 |
13.69 |
Other Services |
20.99 |
17.04 |
18.84 |
18.62 |
Pharmaceuticals |
18.18 |
17.72 |
18.55 |
17.60 |
Plastics & Rubber |
26.10 |
21.31 |
22.36 |
22.73 |
Postal and Telecommunications |
47.19 |
34.19
|
40.44 |
37.67 |
Printing, Paper and Packaging |
22.37
|
18.51 |
19.88
|
18.73 |
Property |
37.75 |
33.87 |
37.97 |
35.13 |
Servicing/Repair |
16.92 |
14.58 |
15.63 |
14.96 |
Spirits, Wine and Tobacco |
21.08
|
17.36 |
18.73
|
18.03 |
Textiles and Clothing |
29.59 |
23.49 |
24.96 |
25.04 |
Transport |
26.67 |
20.09 |
21.83 |
21.85 |
Utilities |
30.59 |
24.84 |
28.46 |
25.13 |
Wholesaling |
23.74 |
18.45 |
20.13 |
19.94 |
Source: Experian
ENDS
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Ms Serj Heera
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About Experian
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[1] Data collated for Experian’s Late Payment Index commences in Q3 2007.