During recent annual quarters, UK businesses have shown a tendency to pay their debts earlier and earlier – and, encouragingly, this trend appears to have continued for the third consecutive quarter. This trend was recently recorded by Experian and indicates that the time it is taking for UK businesses to pay off debts is now two days faster than it was last year, resulting in an average debt payment time of 23.3 days.
The most impressive reductions in debt payment time were found to have been made by larger companies; however, due to their complex supply chains, these businesses naturally tend to make their debt payments later than SMEs are capable of doing. Indeed, Max Firth, UK managing director for Experian’s business information services, has observed that there is “only so much improvement that can take place among these [larger] firms”, adding that the “very nature of the way large businesses are structured … makes it impossible for them to pay as fast as their smaller more flexible counterparts”.
However, Firth also declared that “It is vital that smaller firms think about their collection strategies, and take on board some of the strategies employed by their larger counterparts to help ensure they get paid on time”. This hints at the likely effectiveness for smaller businesses of drawing upon the services of online accountants like those employed by reputable accountancy firm Yorkshire Accountancy.