The time it takes to pay suppliers across the UK has improved by 14%, with payments taking on average 42 days in 2018 compared to 49 days in 2016. The data compiled by Tungsten Network, a global e-invoicing provider, shows that the time from invoice submission on its network to payment has steadily improved since 2016, coinciding with the UK Government requiring larger businesses to start reporting their payment practices in April 2017.
Figures also show the UK is performing much better than the rest of the Europe with payments being made in 42 days on average versus 52 days on the continent but lags one day behind the US. In producing the data, Tungsten Network has analysed more than 19 million global transactions involving 100,000 businesses that have passed through its e-invoicing platform since 1st January 2016.
Of the transactions analysed, 19.4% of the 1.69m payments made to UK suppliers have been from FTSE 100 companies, which take on average 42 days to pay UK suppliers, the same as the current overall average for the UK.
Further analysis of the data shows that Mexico tops the list of the most improved countries, with its suppliers waiting on average 51 days to be paid, 35% quicker than compared to 2016. The data also shows an improvement for China, where on average it takes 57 days for suppliers to be paid, a 32% decrease.
Richard Hurwitz, Tungsten Network’s CEO, said: “Prompt payment is an important contributor to maintaining a healthy supply chain, so it’s encouraging to see from our data that the UK payments culture has seen some improvement over the past two years. Nevertheless, instances such as the collapse of Carillion indicate that late payments to suppliers continue to be rife in certain sectors of the UK economy.
“The decision by the government to push for greater transparency of payment practices among larger businesses shows positive intent. It will be interesting to see whether the government’s proposal, encouraging large businesses to appoint a board member to be responsible for making sure invoices are paid on time, has any impact on the payments culture across the UK.
“It’s also good to see the government promoting the use of technology in tackling the UK’s late payment culture, as it’s clear too many businesses are still using paper-based invoices.”
Analysis of the UK Government’s payment practices data shows of the 5,812 larger businesses having reported their payment practices to the UK government to date, only 9% have signed up to a recognised payment code such as the government-backed Prompt Payment Code.
The UK Government payment practices data also reveals that the average large business in the UK pays 32% of their invoices later than stipulated in the agreed terms with suppliers.
Further afield, Tungsten Network’s data reveals that suppliers in Europe (excluding the UK) have to wait on average ten days longer to be paid than the UK, and 11 days longer than the US. Meanwhile businesses in Italy, where its government will require a digital stamp on all invoices to help enhance tax revenues, take 60 days on average to be paid. An expected consequence of the Italian government’s move this January could be that it shortens the time it takes companies to pay suppliers.
Richard Hurwitz said: “As far as Europe is concerned, we will follow this statutory change in Italy to see whether Finance executives use it as a catalyst to articulate a digital strategy for their invoice to pay workstream. Companies that digitise invoices cut unnecessary friction in their accounts payable and accounts receivable departments which results in faster payments to suppliers, a good thing for the wider economy.”