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Payment terms fall for the 2^nd consecutive quarter, another sign the economy is heading back on a good track.

According to credit ratings agency Dun & Bradstreet, average payment terms fell to 51.8 days three days less than last quarter. In the past 6 months payment terms have fallen 5.6 days, representing the lowest level since late 2007.

In the September quarter, small firms were the quickest to pay, averaging less than 50 days to settle accounts.

Those with 50 to 199 employees were the biggest improvers, with their reduction in terms moving them into the quickest paying spot. This group averaged 48.4 days to settle accounts, an improvement of 5.5 days quarter-on-quarter and 5.3 days year-on-year.

Big business remains the slowest payers at 56 days, still representing an improvement by three days quarter-on-quarter and 3.5 days year-on-year.

Damian Karmelich, Dun & Bradstreet's Director of Corporate Affairs, says the downturn has refocused many companies on the importance of cashflow.

"As banks tightened their lending books firms tried to squeeze more cash from their day-to-day operations and consequently, many firms are now taking action to collect their bills more quickly.

"If this renewed focus continues it will allow executives to free up funds for business investment and to pay down debt or rely less on borrowed funds."