Improving payment for SMEs

IN: Business news

Good news from the smallest companies in the UK - it seems that micro businesses with fewer than three employees are paying their bills faster than last year, with an average of 27.9 days recorded as opposed to the 32.5 days from the first quarter of 2012.

undefinedIt's particularly admirable considering every other type of firm - from the giants to the standard small and medium-sized enterprises of between three and 250 employees - saw an increase in the amount of time it took for them to pay suppliers, utility providers and whatever else.

In fact, the largest companies should be hanging their heads in shame. Despite their larger reserves of cash and easy access to capital, firms with more than 500 employees were found to have the slowest payment time at 33.9 days, as opposed to 31.7 days like-for-like.

The overall average for the entirety of the country's businesses stands at 24.7 days to pay a bill, the quarterly research from credit report specialist Experian claimed.

In accordance with stereotype, Scottish firms were best at handling their cash, paying their bills more than a day earlier than companies in the rest of the UK.

Max Firth, UK managing director for Experian’s business information services division, described the marked improvement among micro businesses as "encouraging" but added that poorer performance for other types of firm is "concerning".

"There is still caution among many firms when it comes to offering business lifelines, such as trade credit and favourable payment terms, and this is impacting on the payment performance of businesses across the UK," he said.

However, despite the problems, Mr Firth said that SMEs still have plenty of options if they get into difficulty with their cashflow.

One such option would be to contact a bank or finance provider that is likely to be more sympathetic to their needs and requirements. Paying bills on time is an essential part of running a business as you may get into difficulty securing credit and capital when you need it later on.

Don't fall into the habit of putting off payment.

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