By Daniel Hunter

The latest Late Payment Index from Experian, the global information services company, revealed that UK businesses paid their bills nearly 1.3 days earlier in Q3 2012, compared to the same period last year.

In July to September this year, firms paid their overdue invoices 24.88 days after agreed terms, compared to 26.17 days during the previous year (Q3 2011).

The Index also reveals that payment performance increased slightly when compared to the previous quarter, from 23.46 days between April — June 2012 to 24.88 days in Q3.

The difference in late payments between the UK’s smallest businesses and the UK’s largest companies has been getting smaller since the final quarter of 2011 - from a difference of nearly 20 days during 2009, down to under 12 days during 2012. This has been led mainly by businesses at the larger end of the scale and remains broadly consistent for Q3 2012.

“The figures show that late payments have significantly dropped compared to the same time last year and it’s encouraging to see that the gap between payment performance of the biggest and smallest businesses has continued to close," Max Firth, UK Managing Director for Experian’s Business Information Services division, said.

"This is a sign of improved behaviour amongst larger businesses. Understanding how quickly clients are paying their invoices provides firms with an early warning sign of potential issues, so that they can plan for any debt or work with firms that are struggling.

“The Q2 to Q3 change, however, does indicate potential cash flow issues in recent months. For firms trying to keep their books balanced, having a full and early view of the all the factors that could impact their business, whether it is late payment or insolvency, could be difference between staying afloat and going under.”

Firms across the UK have either seen an improvement on Q3 last year or remained stable, with the biggest improvement coming from the North West — from 36.75 days to 32.66 days.

Businesses in the food retailing and food manufacturing industries saw the most significant improvements. Food retailers paid their bills 29.15 days after agreed terms compared to 34.21 in the same period last year, while food manufacturers paid their bills 22.91 days late compared to 27.07 days late in Q3 2011.

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