Late and Unpaid Invoices - UK statistics

This article was researched and written by The Business Disputes Register (https://www.disputesregister.org)

KEY findings

1 in 5 insolvencies attributed to late payments (source: Trade body R3)
30% of invoices are not paid within the agreed terms
Large companies tend to take 30% more time than small companies to pay invoices
A government initiative to force larger companies (about 7000 companies) to publish payment statistics and practices has so far had no positive impact
Manufacturing companies tend to be worst payers than service companies
Companies within the “Legal and Accounting activities” category are the worst for paying promptly
Other consequences of late payments are paying own suppliers late, getting into increased debt and reducing salaries or paying staff late
90% of small company managers surveyed complain they do not have access to tools or information to assess whether they are trading with insolvent companies (see our article listing potential insolvency indicators).

Background

The Small Business, Employment and Enterprise Act 2015 came into force in 2016 which obliged large and listed companies in the UK to report their payment practices, such as average payment days and the proportion of invoices they pay beyond agreed terms. This data is made public with the aim of shaming companies into improving their practices, however analysis of the data reveals that to date there has been no overall improvement.

The adjoining table groups companies by how many (completed) reports have been filed so far. As can be seen, only the grouping of companies that have filed just 2 reports shows an improvement, albeit a small one, whereas the other groupings all show deteriorating performances.

	Companies	Average days to pay (1st report)	Average days to pay (Last report)
1 report filed	756	36.9	N.A
2 reports filed	4,241	37.2	36.6
3 reports filed	1,537	37.2	37.7
4 reports filed	333	38.8	39.2
5 reports filed	12	35.6	45.3
Total	6,879	37.3	37.1

* Number of companies that have submitted complete reports without obvious errors

It seems publishing these stats has not shamed companies into improving their practices. It is still early days, but the initiative might be more successful if the stats were not buried on a government website. You can search for reports here: https://check-payment-practices.service.gov.uk/search.

Worst 20 payers

It is alarming that some companies are taking over a year to pay their bills. They are effectively using their suppliers as a cheap source of finance.

Company Name	Average days to pay	Invoices not paid within agreed terms	Activity (SIC)	Revenue (£m)
SOUTH DOWNS WASTE SERVICES LIMITED	788	0%	Collection of non-hazardous waste	48.7
MINSTER LAW LIMITED	526	1%	Solicitors	36.1
CHAIN REACTION CYCLES LTD	382	12%	Retail sale of sports goods, fishing gear, camping goods, boats and bicycles	127.5
QHG TRADING LLP	310	0%		5,853.90
IRWIN MITCHELL LLP	240	18%		222.3
BAE SYSTEMS (OMAN) LIMITED	176	79%	Defence activities	1,057.00
STAPLETON'S (TYRE SERVICES) LIMITED	152	69%	Wholesale trade of motor vehicle parts and accessories	305.1
ERNST & YOUNG (ASIA-PACIFIC) SERVICES LIMITED	149	94%	Accounting and auditing activities	651
KYOWA KIRIN LIMITED	144	72%	Other business support service activities not elsewhere classified	59.5
FIRST TRANSPENNINE EXPRESS LIMITED	136	29%	Passenger rail transport, interurban	258.6
ERNST & YOUNG (EMEIA) SERVICES LIMITED	136	83%	Accounting and auditing activities	1,985.00
MONDELEZ UK HOLDINGS & SERVICES LIMITED	133	31%	Manufacture of cocoa and chocolate confectionery	43
AB INBEV UK LIMITED	133	17%	Manufacture of beer	1,501.90
COSTAIN OIL, GAS & PROCESS LIMITED	131	82%	Construction of other civil engineering projects not elsewhere classified	65.4
TUI UK TRANSPORT LIMITED	129	96%	Other service activities not elsewhere classified	1,956.50
BALL BEVERAGE PACKAGING EUROPE LIMITED	129	13%	Other service activities not elsewhere classified	1,732.40
ISUZU TRUCK (UK) LIMITED	127	32%	Sale of other motor vehicles	45.9
E.ON CLIMATE & RENEWABLES UK HUMBER WIND LIMITED	118	63%	Production of electricity	125.7
BALL BEVERAGE PACKAGING EUROPE LIMITED	129	13%	Other service activities not elsewhere classified	1,732.40
ISUZU TRUCK (UK) LIMITED	127	32%	Sale of other motor vehicles	45.9

Best 20 payers

In contrast the best companies achieve an average payment of 3 days or less, with some companies averaging same day payment. With today’s digital technology, this should be the goal for all companies.

Company Name	Average days to pay	Invoices not paid within agreed terms	Activity (SIC)	Revenue £m
XEROX FINANCE LIMITED	2	0%	Renting and leasing of office machinery and equipment (including computers)	384.4
EXXONMOBIL GAS MARKETING EUROPE LIMITED	2	0%	Wholesale of other fuels and related products	380.9
ROEVIN MANAGEMENT SERVICES LIMITED	1	9%	Temporary employment agency activities	27.6
PONTOON EUROPE LIMITED	1	7%	Other activities of employment placement agencies	641.00
SPRING TECHNOLOGY STAFFING SERVICES LIMITED	1	6%	Temporary employment agency activities	151.1
AWIN LTD	1	5%	Other information service activities not elsewhere classified	263.60
HILTON UK MANAGE LIMITED	1	0%	Hotels and similar accommodation	37.4
INTERBAY ML, LTD	1	0%	Activities of mortgage finance companies	48
GE ENERGY POWER CONVERSION TECHNOLOGY LIMITED	1	0%	Other research and experimental development on natural sciences and engineering	48.6
ANGEL TRAINS GROUP LIMITED	1	0%	Activities of head offices	65.3
LUXFER HOLDINGS PLC	1	0%	Activities of head offices	441.30
BADENOCH AND CLARK LIMITED	0	3%	Temporary employment agency activities	132.3
APOLLO CINEMAS LIMITED	0	0%	Motion picture projection activities	19.70
TALKMOBILE LIMITED	0	0%	Other telecommunications activities	52.3
ENSCO U.K. LIMITED	0	0%	Support activities for petroleum and natural gas extraction	80.20
KNIGHT FRANK SERVICES COMPANY	0	0%	Activities of head offices	82.40
DAISY WHOLESALE LIMITED	0	0%	Other telecommunications activities	98
DPD LOCAL UK LTD	0	0%	Freight transport by road	312.6
TRANSOCEAN DRILLING U.K. LIMITED	0	0%	Other service activities not elsewhere classified	402.70
NEXT DISTRIBUTION LIMITED	0	0%	Operation of warehousing and storage facilities for land transport activities	479

Correlation with company size

It is interesting to note that the best 20 companies are on average a quarter of the size of the worst 20 measured in revenue terms. In fact, there is some correlation between size or company and late payments. In the chart below we see that for companies whose revenue is between £10 million and £100 million, payment days get worse the bigger the company going from 30 days to 39 days. Between £100 million and £10 billion, late payments on average plateau at around the 38 day mark. The very biggest companies, between 10 and 100 £ billion do marginally better at 35 days.

Payment times by Industry

Some industry sectors are worse than others. Generally manufacturing is worse than service though there are many exceptions.

SIC category	Average days to pay
6.9 - Legal and accounting activities	74
5.6 - Food and beverage service activities	69
1.8 - Printing and reproduction of recorded media	58.7
1.7 - Manufacture of paper and paper products	58.1
3.8 - Waste collection, treatment and disposal activities; materials recovery	56.9
2.4 - Manufacture of basic metals	53.6
2.9 - Manufacture of motor vehicles, trailers and semi-trailers	52.5
1.1 - Manufacture of beverages	50.4
2.3 - Manufacture of other non-metallic mineral products	50.1
2.5 - Manufacture of fabricated metal products, except machinery and equipment	49.4
2.2 - Manufacture of rubber and plastic products	49
8.1 - Services to buildings and landscape activities	48.9
3.0 - Manufacture of other transport equipment	48.4
2.8 - Manufacture of machinery and equipment n.e.c.	48.3
2.7 - Manufacture of electrical equipment	48.3
4.3 - Specialised construction activities	48.2
1.0 - Manufacture of food products	46.2
3.2 - Other manufacturing	45.5
1.3 - Manufacture of textiles	45.4
2.0 - Manufacture of chemicals and chemical products	44.7
7.5 - Veterinary activities	44.2
3.3 - Repair and installation of machinery and equipment	43.6
0.8 - Other mining and quarrying	43.6
2.1 - Manufacture of basic pharmaceutical products and pharmaceutical preparations	43.4
4.2 - Civil engineering	43.4
3.1 - Manufacture of furniture	42.7
2.6 - Manufacture of computer, electronic and optical products	42.1
5.9 - Motion picture, video and television programme production, sound recording and music publishing activities	41.6
6.1 - Telecommunications	40.5
8.4 - Public administration and defence; compulsory social security	40
3.9 - Remediation activities and other waste management services.	40
1.5 - Manufacture of leather and related products	39.9
4.7 - Retail trade, except of motor vehicles and motorcycles	39.6
4.6 - Wholesale trade, except of motor vehicles and motorcycles	39.1
7.1 - Architectural and engineering activities; technical testing and analysis	39
4.1 - Construction of buildings	38.8
4.9 - Land transport and transport via pipelines	38.5
0.1 - Crop and animal production, hunting and related service activities	37.9
5.2 - Warehousing and support activities for transportation	37.6
7.7 - Rental and leasing activities	37.5
1.6 - Manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials	37.5
0.5 - Mining of coal and lignite	37
9.5 - Repair of computers and personal and household goods	37
8.0 - Security and investigation activities	36.9
7.2 - Scientific research and development	36.7
9.6 - Other personal service activities	36.6
0.3 - Fishing and aquaculture	36.2
6.2 - Computer programming, consultancy and related activities	35.7
8.2 - Office administrative, office support and other business support activities	35.6
1.2 - Manufacture of tobacco products	35.5
4.5 - Wholesale and retail trade and repair of motor vehicles and motorcycles	35.2
5.5 - Accommodation	35.2
7.0 - Activities of head offices; management consultancy activities	34.9
8.6 - Human health activities	34.6
9.2 - Gambling and betting activities	34.6
1.4 - Manufacture of wearing apparel	34.3
9.3 - Sports activities and amusement and recreation activities	34.2
9.7 - Activities of households as employers of domestic personnel	34
7.4 - Other professional, scientific and technical activities	34
3.6 - Water collection, treatment and supply	33.3
0.6 - Extraction of crude petroleum and natural gas	33
7.3 - Advertising and market research	32.2
6.3 - Information service activities	32.2
8.7 - Residential care activities	32
5.3 - Postal and courier activities	31.8
1.9 - Manufacture of coke and refined petroleum products	31.8
5.8 - Publishing activities	31.8
5.1 - Air transport	30.9
0.9 - Mining support service activities	30.8
6.8 - Real estate activities	30.8
9.9 - Activities of extraterritorial organisations and bodies	30.5
3.5 - Electricity, gas, steam and air conditioning supply	29.9
9.1 - Libraries, archives, museums and other cultural activities	29.8
6.0 - Programming and broadcasting activities	29.7
8.5 - Education	28.1
9.0 - Creative, arts and entertainment activities	28
5.0 - Water transport	27.8
6.4 - Financial service activities, except insurance and pension funding	27.8
9.4 - Activities of membership organisations	26.8
8.8 - Social work activities without accommodation	26.4
7.9 - Travel agency, tour operator and other reservation service and related activities	25.2
6.6 - Activities auxiliary to financial services and insurance activities	24.9
6.5 - Insurance, reinsurance and pension funding, except compulsory social security	24.5
0.2 - Forestry and logging	24
7.8 - Employment activities	23.5
0.7 - Mining of metal ores	19

Insolvencies

According to a report published by trade body R3, one in five insolvencies were the result of the companies receiving late payments from their customers. This has a knock-on effect as insolvent companies faced with cash shortage pay their invoices late too and thus cause more insolvencies.

Actions to take

If the company you are dealing with is large (ie has at least two of the following: £36 million in turnover, £18 million on its balance sheet, or 250 employees) then you can check their payments practice report here: https://check-payment-practices.service.gov.uk/search
Avoid having business dealing with companies that are likely to go bankrupt. See our paper on “UK Insolvency Statistics” for a list of indicators to look out for.
If your client is failing to pay, then consider taking them to court (small claims court if invoice is less than £10,000). Alternatively go after their reputation by filing the non-payment on www.disputesregister.org to put it in the public domain