Majority of large firms fail to pay suppliers promptly

8 January 2019

The majority of Britain’s biggest businesses are failing to pay their suppliers promptly, with some taking more than 80 days to settle invoices, according to research by the small business commissioner and Lloyds Bank Commercial Banking.

An analysis of the payment practices of more than 7,000 companies found that almost two thirds (65 per cent) of large firms take more than 30 days to pay their bills.

And more than one in five (21 per cent) of companies take at least 50 days.

For 2% of firms (150), suppliers are made to wait for more than 80 days before they get paid.

Although the national average is 37 days, there is a postcode lottery when it comes to how long it takes companies to pay.

While those in London pay bills in 34 days on average, the shortest time, large firms in Yorkshire and the Humber take an average of 43 days, the longest period.

Large companies that are taking longer than 30 days to pay are in effect using their supply chain to finance their business, according to Paul Uppal, the Small Business Commissioner.

He is calling for a traffic light warning system to be established to enable small businesses to know about larger companies that do not pay their bills on time.

Uppal said: "Our ambition is to help small businesses make more informed choices when deciding which larger businesses they are going to trade with.”

He added: “A traffic light system would be a simple and effective visual way of highlighting which larger businesses are paying promptly and are working in partnership with their supply chain.”

Ed Thurman, managing director, global transaction banking, Lloyds Bank Commercial Banking, commented: “We have discovered wide variations in payments depending on where businesses are located. For some businesses two weeks can be critical in the financial well-being of a smaller businesses. Businesses could consider utilising invoice financing products to mitigate these challenges.”

This comes just months after SM reported a renewed focus by the government to crack down on late payments, with the small business minister Kelly Tolhurst launching a consultation on creating a responsible payment culture.

Under the Reporting on Payment Practices and Performance Regulations, which came into force in April 2017, all large companies having at least £36m in turnover, £18m on their balance sheet, and/or 250 employees are required to publish figures on how long they take to pay their suppliers.

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