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

Monday 4 November 2019 13:32 CET | News

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.

Previse has released the findings of an analysis of over 10 million invoices (representing more than GBP 24 billions of spending by some of the UK’s largest buyers). The figures show that, while late payments are rife throughout the supply chain, the smallest suppliers are paid 30 days late while companies charging the biggest fees are paid, on average, less than a day late. 

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.

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Keywords: Previse, suppliers, payments , late payments, invoicing, fintech
Categories: Banking & Fintech
Countries: United Kingdom
This article is part of category

Banking & Fintech