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UK late payment culture shows signs of improvement as rest of Europe lags behind

23/10/2018

Global payment data revealed by Tungsten Network shows time firms take to pay UK suppliers has reduced

  • Average time to pay suppliers across UK has improved by 14 per cent since 2016
  • UK comes second in global league table, just behind the USA
  • Businesses pay UK suppliers 10 days quicker than the European average
  • Larger businesses pay 3 in 10 invoices late, beyond agreed terms
  • Only 9 per cent of large UK businesses have signed up to a recognised payment code

(London, October 2018) The time it takes to pay suppliers across the UK has improved by 14 per cent, with payments taking on average 42 days in 2018 compared to 49 days in 2016. The data compiled by Tungsten Network, a global e-invoicing provider, shows that the time from invoice submission on its network to payment has steadily improved since 2016, coinciding with the UK Government requiring larger businesses to start reporting their payment practices in April 2017.

Figures also show the UK is performing much better than the rest of the Europe with payments being made in 42 days on average versus 52 days on the continent but lags one day behind the US. In producing the data, Tungsten Network has analysed more than 19 million global transactions involving 100,000 businesses that have passed through its e-invoicing platform since 1st January 2016.  

Of the transactions analysed, 19.4% of the 1.69m payments made to UK suppliers have been from FTSE 100 companies, which take on average 42 days to pay UK suppliers, the same as the current overall average for the UK.

Further analysis of the data shows that Mexico tops the list of the most improved countries, with its suppliers waiting on average 51 days to be paid, 35 per cent quicker than compared to 2016. The data also shows an improvement for China, where on average it takes 57 days for suppliers to be paid, a 32 per cent decrease.

Richard Hurwitz, Tungsten Network’s CEO, said: “Prompt payment is an important contributor to maintaining a healthy supply chain, so it’s encouraging to see from our data that the UK payments culture has seen some improvement over the past two years. Nevertheless, instances such as the collapse of Carillion indicate that late payments to suppliers continue to be rife in certain sectors of the UK economy.

“The decision by the government to push for greater transparency of payment practices among larger businesses shows positive intent. It will be interesting to see whether the government’s proposal, encouraging large businesses to appoint a board member to be responsible for making sure invoices are paid on time, has any impact on the payments culture across the UK.

“It’s also good to see the government promoting the use of technology in tackling the UK’s late payment culture, as it’s clear too many businesses are still using paper-based invoices.”

Analysis of the UK Government’s payment practices data shows of the 5,812 larger businesses having reported their payment practices to the UK government to date, only 9 per cent have signed up to a recognised payment code such as the government-backed Prompt Payment Code.

The UK Government payment practices data also reveals that the average large business in the UK pays 32 per cent of their invoices later than stipulated in the agreed terms with suppliers.

Further afield, Tungsten Network’s data reveals that suppliers in Europe (excluding the UK) have to wait on average ten days longer to be paid than the UK, and 11 days longer than the US. Meanwhile businesses in Italy, where its government will require a digital stamp on all invoices to help enhance tax revenues, take 60 days on average to be paid. An expected consequence of the Italian government’s move this January could be that it shortens the time it takes companies to pay suppliers.

Richard Hurwitz said: “As far as Europe is concerned, we will follow this statutory change in Italy to see whether Finance executives use it as a catalyst to articulate a digital strategy for their invoice to pay workstream. Companies that digitise invoices cut unnecessary friction in their accounts payable and accounts receivable departments which results in faster payments to suppliers, a good thing for the wider economy.”

-Ends-

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Notes to Editors:

Tungsten Network’s data referenced in the news release above is correct as of 1st October 2018. It is sourced from companies that use Tungsten Network’s Invoice Status Service and is displayed in the league table below.

Country

Average time a supplier waited for an invoice to be paid

Split By:

1 Jan 2018 - 30 Sept 2018

Jan 1 - Dec 31 2017

Jan 1 - Dec 31 2016

USA

41

45

43

UK

42

46

49

France

46

50

53

Mexico

51

77

79

European countries (excluding UK)

52

59

61

China

57

72

84

Germany

58

67

67

Italy

60

64

63

India

61

59

56

Brazil

64

59

60

 

*The UK Government data referenced in the press release above is correct as of 1st October 2018. From 6th April 2017, large companies and limited liability partnerships (LLPs) have been required to publicly report twice a year on their payment practices and performance, including the average time taken to pay supplier invoices. Further information from the UK Government in relation to this requirement can be accessed here.

About Tungsten Network

Tungsten Corporation (LSE: TUNG) aims to be the world’s most trusted business transaction network by using data intelligently to strengthen the global supply chain.

 

Tungsten Network is a secure business transaction network that brings businesses and their suppliers closer together with unique technology that revolutionises invoice processing, maximises efficiency and improves cash flow. Delivering trusted connections and streamlined transactions, the network also provides users with real-time spend analysis and offers suppliers access to invoice financing through Tungsten Network Finance, a form of alternative finance for businesses.

 

Tungsten Network processes invoices for 74 percent of the FTSE 100 and 71 percent of the Fortune 500. It enables suppliers to submit tax compliant e-invoices in 48 countries, and last year processed transactions worth over £164bn for organisations such as Alliance Data, Cargill, Deutsche Lufthansa, General Motors, GlaxoSmithKline, Mondelēz International, Henkel, IBM, Kellogg's and the US Federal Government.

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