The latest IT Contractor News from Contract Eye

The latest data published by Experian shows that the number of days businesses take to settle their outstanding invoices has increased markedly over the past year, with businesses in the North West the worst offenders.

The single biggest reason why small businesses go under is poor cashflow management, and the latest data by the information services provider provides little comfort to the UK's micro businesses, including many limited company contractor firms.

Although a large proportion of contractors work via agencies, which tend to process payments relatively quickly, late payment can still be an issue, especially for contractors working directly for end clients.

Late payment problem varies between regions, industries, business types

The research shows that businesses, on average, settle their invoices 26.13 days beyond the agreed terms. This compares to a mere 22.65 days in Quarter 3 2010, representing quite a startling increase in late payment, due to the ongoing economic malaise in the country.

Small businesses themselves are the best payers - taking just over 20 days to settle outstanding invoices. Larger companies (with 500 employees or more) take just under 35 days beyond the agreed terms to settle their bills.

The late payment problem varies significantly between regions, with businesses in the North West taking far longer than any other to settle up - at 36.72 days, compared to 28.69 days in London, 20.83 days in the South East, 20.05 days in Northern Ireland, and an impressive 18.18 days in the South West.

Variations also occur between industry sectors, with servicing/repair, oil, insurance and agriculture companies the quickest to pay their dues (under 20 days). The worst payers are in telecoms/postal (46.62 days), Food retailing (34.33) and Leisure and Hotels (35.91).

Some of the leading users of contractors tend to pay their bills faster than average - including firms in IT (22.74) and Engineering (20.70).

Are you experiencing payment issues?

Of course, these figures all represent payment times beyond what was contractually agreed in the first place, not payment times following issue of the invoice, demonstrating the sheer scale of the late payment epidemic in the country.

If you are experiencing problems extracting payment from a client, try our popular guide, how to deal with late payment problems for some potential solutions, from the steps you should take when issuing invoices in the first place, to dealing with accounts departments, and even calling in the 'debt recovery' experts.

For in-depth cashflow management news and guides, try our sister site Bytestart.