Hang your heads, corporates; freelancers remain fastest at settling invoices

Money, News

You don’t get rich writing cheques, the saying goes, and apparently it’s a mantra that the UK’s largest corporates are putting into practice more and more often. Data released by Experian today shows that the UK’s largest companies (those with 500+ employees) on average settle overdue invoices two weeks slower than businesses of one or two people.

Freelancers and contractors proved to be the fastest payers yet again, settling their late invoices on average 20.7 days after their due date in the second quarter of 2013. The average payment time increases quite uniformly by business size, culminating in a hefty 34.2 days overdue for businesses of 500 people or more. The national average was 24.6 days.

This will come as no surprise to regular readers – Experian’s previous reports have shown similar behaviour for years – however it’s worrying to note that overall average payment times increased by one day compared to Q2 last year, and the payment times of the largest companies surveyed increased by almost 4 days.

The blame for late payment further down the supply chain is laid squarely at the feet of these big firms, with Experian’s Max Firth commenting:

“Although these firms are still paying their suppliers faster than they were in 2009, the slowdown in payment over the past 12 months will be felt by the wider supply chain.

“These firms deal with hundreds of suppliers across multiple sites, numerous departments and hundreds of employees, so bringing their payment performance in line with smaller firms is a real challenge. Smaller businesses should consider spending time and resources to ensure they get paid on time.”

Regionally, the South West grabbed the top spot for fastest payments across all business sizes, averaging 17.5 days over agreed terms; a week faster than the national average of 24.6 days.

Photo by Alan Levine