T H E
S T A T E O F
L A T E P AY M E N T
T H E L A T E P A Y M E N T R E P O R T
J A N U A R Y 2 0 1 6
02
CONTENTS
04 KEY FACTS
05 LATE PAYMENT OVER TIME
06 BLUE CHIPS VS SMES
07 BLUECHIPS & FTSE 350
08 SME
09 BIG TECH
10 BANKS
11 PUBLIC SECTOR
13 SUPERMARKET
14 RETAILERS
15 INTERNATIONAL
16 UK VS EUROPE VS REST OF WORLD
17 REGIONAL BUSINESS
18 WHO PAYS WHEN?
19 CONCLUSIONS
T H E L A T E P A Y M E N T R E P O R T
J A N U A R Y 2 0 1 6
03
Late payment is the silent killer
of modern business.
The simple act of not getting paid when you should has an adverse effect on the success of any company. But it’s Britain’s small and medium sized enterprises – which make up 99% of all UK businesses – that bear the brunt of the problem. It’s estimated that UK SMEs are owed more than half a trillion pounds in outstanding invoices. That number speaks for itself.
This report dives deeper into where and why late payment is occurring, across different sectors, industries and countries. Our data challenges the pre-existing conceptions of certain companies as ‘villains’ of the small supplier community, and looks to uncover new findings that go beyond media headlines. We also look further afield, comparing the UK with its European counterparts, and the rest of the world.
At MarketInvoice, we capture data on every aspect of an invoice. Who it’s issued by, issued to and issued when. More importantly, we also record when each invoice is contractually due, as well as when it is actually paid.
These numbers underpin our lending model at its most basic level. As a result, we’ve collected a vast pool of data in the last five years – over 30,000 individual invoices, issued to companies of all sizes, in over 80 different countries. This report, the first of its kind, looks mainly at payment records in 2015. However, we plan to release new data regularly, and if this report captures the ‘state’ of late payment here and now, future data will track how the problem evolves over time. The data in this report highlights a very real, very prevalent issue that affects millions of businesses owners every day. Whilst our data goes some way to illustrate the scale of late payment across the country, real action must be taken to stem the problem at its source. Larger companies must take more responsibility in their position of power with suppliers, and change what is currently, a damaging culture for UK businesses.
ANIL STOCKER Co-founder and CEO MarketInvoice
KEY FACTS
60%
of invoices are
PAID LATE
TWO WEEKS LATE
invoices paid more than
1/5
- average invoice paid
6.0
DAYS LATE
OVER
30,000
INVOICES
ACROSS
5
YEARS
FROM
80
COUNTRIES
DATA F R O M :
LATE PAYMENT OVER TIME
70% 60% 50% 40%2015
2014
UK
EUROPE (NOT UK)
TOTAL
2013
BLUE CHIPS
VS
SMES
PROPORTION OF INVOICES PAID LATE BY (%)
2014
4 0% 50% 30%2015
AVERAGE PAYDAY 2015
DUE DATE1
2
-1
-2
3
4
5
6
7
LATE EARLY51.4
BLUE CHIP62.2
BLUE CHIP53.4
SME61.7
SMEWhilst larger companies generally had a worse payment record than smaller business, late
payment is becoming more prevalent across the board when compared to previous years.
SME
BLUE CHIP
4.3
DAYS
LATE
5.9
DAYS
LATE
AVERAGE PAYDAY 2015
2
1
-1
-2
3
4
5
6
7
LARGE COMPANIES
BLUECHIPS & FTSE 350
FTSE 350
4.0
DAYS
LATE
BLUE CHIP
5.9
DAYS
LATE
FTSE 350 companies have a better record than their fellow blue chips, and also out perform SMEs.
DUE DATE
LATE
EARLY
PROPORTION OF 2015 INVOICES PAID LATE BY (%)
62.2
BLUE CHIP
60.9
FTSE 35060% 50% 4 0%
SME SPOTLIGHT
ON
TIME
4%
all invoicesTWO WEEKS
late or more1/4
OVER Of all early payments,16.3
DAYS
EARLY
AVERAGE Of all late payments,15.9
DAYS
LATE
AVERAGEEA
RL
Y
34
%
LATE
62
%
When SMEs do miss the due
date of an invoice they tend
to do so by some margin.
The same can be said for
payments made early.
This is systematic of poor
planning and ad-hoc admin.
AVERAGE PAYDAY:
4.3
BIG TECH SPOTLIGHT
This data shows a
general lack of control
and disregard for
suppliers, rather than
a systematic culture of
late payment.
AVERAGE PAYDAY:
1.7
DAYS LATE
LATE
50.5%
EARLY
44.6
%
ON
TIME
5.9%
Of all late payments,14.7
DAYS LATE
AVERAGE
TOP
SECTOR
for early
payment
EA
RLY
44.6
%
LATE
50.5
%
- the worst
sector
4
2
-2
-4
6
8
10
12
DUE DATE LATE EARLYBANKS SPOTLIGHT
PAYMENT BREAKDOWN (%)
44.7
LATE52.6
EARLY2.6
ON TIMEBanks were the only sector that paid earlier more often than late in 2015.
AVERAGE PAYDAY 2015
TECH COMPANIES1.7
DAYS LATE BANKS0.3
DAYS LATE FTSE 3504.0
DAYS LATE5.9
DAYS LATE BLUE CHIP4
2
-2
-4
6
8
10
12
DUE DATE LATE EARLYAVERAGE
2014
PAYDAY
0.4
DAYS LATE
PUBLIC SECTOR SPOTLIGHT
AVERAGE PAYDAY 2015
PUBLIC SECTOR6.3
DAYS LATE FTSE 3504.0
DAYS LATE TECH COMPANIES1.7
DAYS LATE BANKS0.3
DAYS LATE44.7
61.7
AVERAGE
2015
PAYDAY
6.3
DAYS LATE
PROPORTION OF INVOICES
PAID LATE BY PUBLIC SECTOR (%)
2014
2015
PUBLIC SECTOR BREAKDOWN
4
2
-2
-4
6
8
10
12
14
16
18
SCHOOLS & ACADEMIES17.9
DAYS LATE HOSPITALS & NHS7.2
DAYS LATE LOCAL COUNCILS0.3
DAYS LATEAVERAGE PAYDAY 2015
PROPORTION OF 2015 INVOICES PAID LATE BY (%)
80.6
SCHOOLS & ACADEMIES63.9
HOSPITALS & NHS50.3
LOCAL COUNCILS DUE DATE LATE EARLYIt was schools and academies in particular that paid exceptionally late,
with local authorities actually paying relatively promptly.
SUPER MARKETS
SUPERMARKET SPOTLIGHT
AVERAGE PAYDAY 2015
PROPORTION OF 2015 INVOICES PAID LATE BY (%)
68.7
SUPER MARKETS60.9
FTSE 35050.5
TECH COMPANIES44.7
BANKS7.2
DAYS LATE4
2
-2
-4
6
8
10
12
DUE DATE LATE EARLY FTSE 3504.0
DAYS LATE4.0
DAYS LATE TECH COMPANIES1.7
DAYS LATE BANKS0.3
DAYS LATE4
2
-2
-4
6
8
10
12
DUE DATE LATE EARLYRETAILERS SPOTLIGHT
High street retailers have the worst payment
record of any sector or industry we studied.
AVERAGE PAYDAY 2015
7.2
DAYS LATE SUPERMARKETS10.7
DAYS LATE RETAILERSAVERAGE
ECOMMERCE PAYDAY
7.2
DAYS LATE
VS
AVERAGE
HIGH STREET PAYDAY
14.0
DAYS LATE
69.8
HIGH STREET62.0
E- COMMERCEPROPORTION OF 2015
INVOICES PAID LATE BY (%)
TECH COMPANIES
1.7
DAYS LATE BANKS0.3
DAYS LATE FTSE 3504.0
DAYS LATE4.0
DAYS LATESWITZERLAND GERMANY NETHERLANDS USA BELGIUM IRELAND UK FRANCE
INTERNATIONAL
AVERAGE PAYDAY 2015
PROPORTION OF 2015
INVOICES PAID LATE BY (%)
JAPAN -6.5 BELGIUM -4.1 NETHERLANDS -3.0 SWITZERLAND -0.8 GERMANY -0.5 IRELAND -0.1 DENMARK 1.2 CHINA 1.9 FINLAND 3.4 UK 5.85 FRANCE 6.1 USA 7.1 CANADA 12.0 POLAND 12.0 ISRAEL 13.5 UAE 14.3 SOUTH AFRICA 16.5 MEXICO 18.6 AUSTRALIA 26.4
35.0
40.2
45.9
62.3
38.3
45.7
50.6
75.4
DUE DATE LAT E LAT E EA RLY EA RLY DUE DATEUK
VS
EUROPE
VS
REST OF WORLD
62.3
UK45.7
USA40.4
EUROPE (NOT UK)72.5
REST OF WORLD (NOT EU/UK)PROPORTION OF 2015 INVOICES PAID LATE BY (%)
AVERAGE UK PAYDAY
5.85
DAYS LATE
VS
AVERAGE EUROPE PAYDAY
0.3
DAYS LATE
REGIONAL BUSINESS SPOTLIGHT
TREATMENT OF LOCAL SMES
YORKSHIRE
68.9
%
SCOTLAND50.4
%
EAST MIDLANDS66.3
%
EAST OF ENGLAND60.0
%
NORTH WEST64.1
%
NORTH EAST62.4
%
LONDON61.4
%
61.4
%
LONDON WALES64.4
%
SOUTH EAST59.8
%
WEST MIDLANDS57.4
%
SOUTH WEST45.2
%
EARLY
4
2
-2
-4
-6
6
8
10
WHO PAYS WHEN?
LATE
12
14
PUBLIC SECTOR6.3
ONLINE RETAILERS + SUPER MARKETS UK BLUE CHIPS FTSE 3507.2
TECH COMPANIES1.7
UK SMEs4.3
BANKS EUROPE (NOT UK)0.3
0.3
-0.8
USA7.1
REST OF WORLD (NOT EU/UK)10.6
GERMANY-0.5
NETHERLANDS-3.0
JAPAN-6.5
UK5.9
5.9
RETAILERS10.7
HIGH STREET RETAILERS14.0
4.0
S
E
C
T
O
R
CO
U
N
T
R
Y
CONCLUSIONS
• Late payment is very much a UK problem. Other European
countries such as Germany, Switzerland, the Netherlands and Belgium have a significantly better payment record. However, all payments from debtors in these countries were still made to UK businesses – how these European nations treat businesses of their own country, is unknown. The Government should review how these other large economies manage payments regulation.
• There is a fundamental culture of systematic late payment within the UK’s largest retail groups. Whilst supermarkets
often make the headlines, our data actually finds high-street retail stores to be the worse sector for paying suppliers late. In sectors such as retail, the prominence of late payment is so extreme and so consistent that one has to also assume it is by design. The increased consumer demand for value from retailers could be leading to the supplier being squeezed hard at the other end of the deal.
• The UK public sector has a disappointingly poor record for paying on time – especially within its academic institutions.
The government must lead by example if it is to successfully clamp down on the substandard practices of big businesses.
• The payment records of SMEs and bluechips are more similar than one would expect. However, SMEs tend to pay far more
sporadically, often very late or very early. This would suggest an ad hoc attitude to payment, or a deliberate delay for the sake of cash flow. There is also the possibility that SMEs are merely passing on a payment problem from the top of the chain.
• There is a broad North-South divide in the UK when it comes to the treatment of SMEs on a regional level. Whilst not
absolute, businesses in the North West and Yorkshire, were paid late considerably more than those in London and the South.
• Japan’s unique record of paying early might be explained by its zero to negative interest rates. With no reason to save,
capital is actually better utilized by investing in material stock and physical goods. Thus, big Japanese businesses actually have an incentive to pay promptly, with less reason to hoard cash. The same case can also be made for Switzerland.
T H E L A T E P A Y M E N T R E P O R T
2 0 1 6
www.marketinvoice.com @marketinvoice [email protected] MANCHESTER5th Floor Chancery Place
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