Longest-ever wait for payment for SMEs in retail, automotive and manufacturing
Small businesses supplying the automotive, retail and manufacturing sectors face the longest-ever wait for payment from some of the UK’s largest companies, according to Good Business Pays.
Good Business Pays, which campaigns to stamp out bad payment practice and poor payment culture, analysed payment data that shows that the average number of days taken to pay suppliers has risen between February 2022 and February 2023.
Terry Corby, CEO and founder of Good Business Pays said: “In 2023, we can see payment culture playing out in big business. In multiple industries, the slowest payers from last year and paying even slower this year, and the fastest payers from last year and paying even faster in 2023. This is the case in the UK automotive, retail and manufacturing sectors, who continue to face significant challenges related to slow or late payments. These issues can have serious consequences for businesses, making it difficult to manage cash flow, pay suppliers and employees, and invest in growth.
Alarmingly, while data reveal that many sectors have improved their payment practices, Good Business Pays is concerned that the number of companies that report payment performance data has declined every year since 2017, despite a legal requirement for large companies to do so. Of the (roughly) 11,000 organisations required to report, only just over 5,000 currently reported payment data.
Terry added: “It is worrying to see how many companies just don’t bother to report their payment practices at all. Less than half of companies that should be complying with the law actually are doing so, and I think it would be safe to assume that there is much more bad payment practice from companies that don’t bother reporting that we never see.
Payment times can be an important indicator of how a company is being run. We urge investors to demand transparency of payment practices. The black hole that has emerged in good reporting practice may mask an underlying vulnerability of an organisation and we see a growing correlation between delayed payment times and business failure.”