The payment performance of UK firms improved for the fifth month in the last six months in January, according to the late payment index from information services company Experian.

The index shows that businesses, on average, paid their bills 20.74 days after agreed terms in January, an improvement of over two-and-a-half days on January 2009 (23.55 days). Firms with one to two employees settled payment the quickest, 18.10 days after agreed terms in January, compared with 20.71 days late in January 2009.

Joe Myers, head of commercial credit at Experian, says: “The improvements in payment performance suggest that firms are becoming less inclined to delay payment as a way of managing for cash. This benefits everyone, not least the paying firm itself as it will reflect well in their credit score.”