By Max Clarke

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, the Late Payment Index from Experian® has revealed.

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.

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."
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.