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.
In the retail sector, where small enterprises face challenges from larger, better resourced organisations, almost all the slowest paying retailers from last year all increased their payment times this year:
- Telefonica O2 which increased average days to pay from104 to 109 days.
- TK Maxx payments increased from 76 to 77 days.
- Halfords payments increased from 70 to 75 days.
- Waterstones payments increased from 73 to 75 days.
- Hobbs payments increased from 53 to 66 days.
- Holland and Barrett payments increased from 53 to 63 days.
However, Good Business Pays was also pleased to report some retailers recording significant improvement:
- Sports Direct improving from 39 days last year to 29 days this year
- Seasalt going from 38 to 28 days.
- Virgin Mobile also going from 38 to 28 days.
- House of Fraser improved a lot from 38 to 23 days.
- Body Shop International improving from 20 to just 9 days
Terry Corby, CEO and Founder of Good Business Pays said: “In 2023, we can see payment culture playing out in big business. In retail, we see 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. Slow or late payment can These have serious consequences for businesses, making it difficult to manage cash flow, pay suppliers and employees, and invest in growth. In retail, there can be ripple effects through a whole supply chain when larger companies in the chain withhold payment, putting the smallest companies in the chain at risk.”
Good Business Pays analysed data submitted to the Department for Business, Energy and Industrial Strategy (BEIS) under its Payment Practice and Performance reporting scheme. While the data reveals that some sectors have improved their payment practices, Good Business Pays is alarmed 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 Corby, Founder and CEO of Good Business Pays, 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 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.”
Founded in 2021, Good Business Pays campaigns to encourage large businesses to adopt fast payment processes. It is now supported by financial behemoths that include Mastercard, Barclays and Previse, as well as the Federation of Small Business, CBI, Institute of Directors, Make UK, and the British Chambers of Commerce.