Posted: Tue 22nd Nov 2022
Large food and tobacco companies top the league for late payment of UK suppliers with 70% of invoices not paid on time in the first half of 2022, according to analysis of data provided to the government.
Since February 2017, big businesses have been required to report to the Department for Business, Energy and Industry Strategy (BEIS) the average time they take to pay suppliers and the proportion of payments not settled on time.
AP automation provider Medius analysed the figures and found that the proporation of late payments by food and tobacco firms rose to 70% during the first six months of this year, compared to 47% during the same period in 2021.
The second worst offenders were oil and gas firms which paid 38% of invoices late (31% in 2021), followed by electronics companies with the same proportion not paid on time, compared to 26% in 2021.
When it comes to the average length of time taken to pay a bill, beverages firms were the slowest at 95 days, followed by automobile companies on 69 days and food and tobacco businesses taking an average 67 days.
In contrast, utilities (19 days), banking (20 days), and residential (20 days) companies were the quickest to pay.
Paul Ellis, UK director of excellence at Medius, said:
"Within the current volatile economic climate, it's never been more important for businesses to control their cashflow and build high-functioning business relationships and supply chains.
"We know that late payments are a common practice in business, but at times like these - they have an even more damaging impact for business, and especially for SMEs - the lifeblood of the economy.
"Transparency in data and business practices can help tackle the problem. But we still have a long way to go. Clearly, late payment practices are still rampant, and even worse, a significant number of businesses aren't declaring this information- which is vital to build trust, and accountability."
Around 65% of invoices to small businesses were paid late in May, according to a study by Intuit QuickBooks, with an average of £22,700 outstanding per business.
Enterprise Nation's Small Business Barometer for the third quarter in 2022 found one third of small businesses are still not paid on time.
Ahead of the Autumn Statement, Enterprise Nation called on the government to "sort out late payment once and for all" including making it easier for the Small Business Commissioner to tackle large businesses that delay payment and giving clearer advice to small businesses to ensure they invoice with clear terms.
A report earlier this year by Enterprise Nation and the Entrepreneurs Network also said that the government should act on late payment.
Podcast: How to deal with late payment