Businesses pay their smallest suppliers 30 days later than their bigger suppliers

Data released by Previse, the fintech that uses AI to get suppliers paid instantly, has shown the extent to which the problem of slow payments is concentrated among small suppliers, a fact which public payments reporting fails to highlight.

Suppliers invoicing for a value less than GBP 10,000 p.a. are not even processed by buyers until 35 days after being received on average, ensuring that payment, usually due within 30 days, is late before the invoice has even been approved. Large suppliers, on the other hand, have their invoices prioritised, taking just 3 days to be processed, while also being paid faster after being approved.  

Large companies in the UK are now required to publish official statistics on how quickly they pay suppliers. However, the reporting does not require them to provide separate figures for SME suppliers. This means that, while the average time it takes to pay an invoice is 37 days (taken from analysis of Prompt Payment Reports published up to 8th October 2019), it is likely that the situation for SMEs – those suppliers most in need of fast payment – is far worse. 

Slow business to business (B2B) payments caused by inefficient payment terms cost the world’s economy almost GBP 250 billion every year. They cripple business and economic growth and are one of the leading killers of small suppliers (European Commission – Economic Impact of Late Payments, 2014). Paying slowly also costs large buyers, because a supplier’s expensive cost of borrowing is priced into the cost of the goods or services supplied. 

In response to this new data, Previse calls for the Government to require companies to report specifically on their treatment of SME suppliers to ensure that they are properly protected.