Credit Management November 2018

PAYMENT TRENDS
Back to school
The latest monthly business to business
payment performance statistics.
AUTHOR – Jason Braidwood FCICM(Grad)
SEPTEMBER – the start of the
academic year and the month
when businesses hit the ‘reset’
button and focus on getting
back to full productivity after
months of summer holidays
and interruptions. In theory, this change
in attitude should be reflected in the late
payment data. And indeed it is, with the
month bringing reductions in the average
Days Beyond Term (DBT) that invoices are
paid for three quarters of the sectors tracked
and across all but two regions.
After a broadly disappointing performance
across the board last month, it’s encouraging
to see businesses step up and significantly
improve their payment processes. The
average DBT figures across regions and
sectors have fallen back in line, to 13.4
days and 14.6 days respectively. However,
these numbers are still significantly higher
than the same period a year ago, suggesting
that other factors are having an impact on
business’ ability to make prompt payments
within the terms agreed.
External factors will always have a role to
play, and despite the news this month from
the Office of National Statistics (ONS) that
the UK economy grew by 0.7 percent in the
three months to August – it’s fastest pace
since February 2017 – every day there are new
claims that British businesses are struggling.
In the last week alone, the FTSE 100 hit a sixmonth
low, the International Monetary Fund
(IMF) cut global growth forecasts and said
UK public finances are among the weakest in
the world, and the Confederation of British
Industry (CBI) is calling for the Government
to introduce a £2 billion package of measures
in the Budget to encourage investment. Add
into the mix Brexit, and there’s little wonder
that businesses hardly know if they are
coming or going.
While it’s clear that improvements have
been on the cards for many this month,
there’s always more that can be done.
Ongoing uncertainty is likely to continue
for the foreseeable future so building in
greater resilience by paying invoices in a
timely manner is one way for companies to
support the overall business ecosystem. The
overarching aim should be to pay companies
as you would wish to be paid – i.e. on time!
SECTOR SPOTLIGHT
Business from home posted the biggest
improvement with a reduction of 6.8 days.
Similarly, the financial and insurance
(14.5 DBT), IT and Comms (15.6 DBT),
Hospitality (9.0 DBT), and Health and
Social Care (11.4 DBT) industries all
showed the greatest decreases in late
payments, with hospitality coming in as
the top prompt payer overall.
At the other end of the scale, the
Energy Supply sector is stuck at the
bottom of the table with the worst DBT
of 21 days. Meanwhile, International
Bodies (12.1 DBT), Wholesale (16.1 DBT)
and Agriculture (16.0 DBT) all had a
poor month with an increase in DBT. In
particular, transportation is moving in
the wrong direction – the sector’s DBT
increased by 1.4 days bringing it up to
17.2, and with ongoing fears about the
impact of a no-deal Brexit hitting this
sector particularly hard, there is certainly
cause for concern.
REGIONAL SPOTLIGHT
Only Northern Ireland (15.6 DBT) and
East Anglia (14.4 DBT) continued the
downward trajectory, increasing the
lateness of their payments by 1.3 and
1.8 days, respectively. Scotland’s late
payments sit at 16.3 DBT and London’s at
16.2, ensuring they continue their lengthy
stint at the bottom of the table.
On the more positive end of the scale,
the South East experienced the greatest
improvement with a reduction of 4.6
days in terms of late payments, bringing
with it a DBT of only 9.7. Yorkshire
and Humberside also experienced a
significant improvement of 3.9 days,
resulting in a DBT of 9.8. For both regions,
this is the first time since our records
began in January 2017 that they have
dipped below the ten days beyond terms
mark.
We’ll have to wait and see how these
regions and industries fare over coming
months with the Brexit deadline fast
approaching and ongoing uncertainty
continuing to impact the UK economy.
Unfortunately, delays in one section of the
business community can quickly begin to
impact others, and we have to hope that
there’s no domino effect that adversely
affects companies more widely.
Jason Braidwood FCICM(Grad),
Head of Credit and Collections at
Creditsafe Business Solutions.
The Recognised Standard / www.cicm.com / November 2018 / PAGE 36