Tuesday 29th January, 2019
Lloyds Bank Commercial Banking in partnership with the Small Business Commissioner has analysed official payment reporting returns based on the annual reports of large businesses. After the legislation in April 2017 that requires all large businesses to publish their payment practices.
The research is being cited in a proposal from the Small Business Commissioner to publish ‘traffic light’ warnings to help small businesses undertaking contracts with large businesses. The large businesses that are taking longer than 30 days to pay are in effect using their supply chain to finance their business. According to a new item, the Commissioner strongly believes that a simple warning system will alert small businesses to the potential risk of longer payment terms.
The research carried out sampled data from 7,010 companies and revealed that:
- 65% of large businesses have an average bill payment time of more than 30 days
- more than a fifth (21%) of large businesses report an average bill payment time of 50 days and above.
- the average time taken to pay a bill is 37 days – with wide variations in different parts of the UK.
- companies in London are the most prompt – paying bills in 34 days followed by those in the South West, paying after 35 days. Whilst companies in Yorkshire and the Humber have the worst record with payments taking 43 days.
- only 14% of companies from the 7,010 analysed, reported payment terms of 19 days or under.
The Small Business Commissioner, Paul Uppal, said: “There has been a requirement since April 2017 for large companies and limited liability partnerships (LLPs) to report twice a year on their payment practices and performance, including the average time taken to pay supplier invoices.