Late and Unpaid Invoices - UK statistics / Dispute Register (2020)
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Late and Unpaid Invoices - UK statistics

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 worse payers than service companies
  • Companies within the “Legal and Accounting activities” category are the worse 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.



CompaniesAverage days to pay (1st report)Average days to pay (Last report)
1 report filed
75636.9N.A
2 reports filed
4,24137.236.6
3 reports filed
1,53737.237.7
4 reports filed
33338.839.2
5 reports filed
1235.645.3
Total6,87937.337.1

* 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.


Worse 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 worse 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

  1. 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
  2. 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.
  3. 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