Data analysis has shown that small businesses in the UK are used to waiting for payments from their customers. The analysis conducted by Ormsby Street revealed that the average time big retailers take to make payments to suppliers is 45 days beyond the agreed terms. Out of the 20 retailers studied, the results showed that none were consistent with paying on schedule.
The worst for payment performance was found to be supermarket giant, Tesco. The analysis found that the retailer takes an average of 105 days beyond terms to pay its suppliers. Tesco were followed closely by Iceland and Debenhams who take an average of 73 – 75 days.
Martin Campbell, Managing Director of Ormsby Street said “Winning a contract to supply a national retailer can be a landmark moment for a small business, particularly in the lucrative Christmas shopping season. But just because a retailer is a household name, it’s no guarantee they are going to pay on time, as our analysis clearly shows. If an invoice had 60 day terms, a small business would be waiting, on average, more than 100 days for payment – that’s clearly unacceptable – and even the best performer amongst these retailers is still not paying on terms.”
Previous research from Ormsby Street also showed that the average overdue invoice owed to a small business was worth around £6,142. Small firms are most certainly feeling the pinch with the amount of large orders in the run up to the Christmas season.
Campbell continued “A small business could be waiting for even more money during the festive period. If they have to take on extra staff or resources to meet the order to a major retailer, this could be a potentially difficult and damaging time for their cash flow.”
The analysis from Ormsby Street also found the best retailers in terms of prompt payments. Fortnum & Mason takes an average of five days beyond terms to pay its suppliers, Lidl supermarket takes on average nine days beyond terms, followed by House of Fraser who takes 15 days and John Lewis who takes 18 days.
If your business is concerned about late payments from your customers, speak to a member of the team at The Channel Partnership about our range of insurance policies to help protect your business on 01275 817320.