Late Payment Statistics in the UK
This article provides a brief overview of late payment statistics in the UK. Business cash flow is always considered important, however in the current climate, cash flow has become paramount to businesses of all sizes and ensuring that payments are made on time is essential to help businesses that are currently trading, to keep trading.
The Chartered Institute of Credit Management (CICM) provide regular updates and information from the credit industry. The March 2021 edition provides a helpful and detailed article from Deputy Editor Iona Yadallee, which shows a clear summary of the current concerns surrounding late payment statistics in the UK. They state that almost every regional business is now suffering from payment delays.
Days Beyond Terms (DBT)
A key indicator used to study late payment statistics is called Days Beyond Terms (DBT). The CICM reports that as of January 2021, DBT figures in Northern Ireland are 17.1 days, in Scotland 19.3 days and reportedly it is East Anglia where businesses are waiting the longest to be paid, currently at 25.4 Days Beyond Terms.
Late Payment Statistics by Industry Sector
The article outlines that for the period (Jan 2021) there are only 5 industry sectors that have seen an improvement in late payment days beyond terms in the UK, compared to the previous month where it was reported that 14 sectors were showing signs of improvement.
It is not surprising that the Hospitality sector is currently suffering severe delays in late payments, with an average of 35.7 days beyond terms, which is a staggering increase of 15.2 days when compared to the previous month. It is reported that the Construction sector has seen a decline to 26.6 DBT and also the industry titled ‘Business from Home’ is now averaging late payment statistics averaging 34.8 DBT for the same month.
As of January 2021, the bottom five industries for late payments were Hospitality, Business from Home, Real Estate, Financial and Insurance, and lastly Agriculture, Forestry and Fishing. The average of these five industries late payments is 30.5 DBT for the period. The top five industries for late payments currently are Health & Social, Education, Public Administration, Wholesale and retail trade, and lastly International Bodies. The top 5 industries provide a late payments average figure of 13.42 days beyond terms.
Importance of effective credit management
The statistics help to outline that late payments occur across all industries and regions of the UK. Late payment of invoices is not limited to certain industries and affects businesses of all sizes. These late payments put pressure on cash flow and the business operations, therefore the importance of effective credit management cannot be understated. The longer an invoice is left outstanding and unpaid, the bigger the risk of this becoming a bad debt and eventually having to be written off.
Effective credit management can help and plays an important role in the sustainability and strength of any business in the UK, whether a business chooses to adopt an in-house credit management process or use an outsourced service. Having an effective credit management team helps a business to keep regular contact with customers, to ensure invoices are paid as soon to terms as possible.
Helping you with customer late payments
With so many demands on business owners, often a difficult function to find the time to manage effectively is the late payment collection process and chasing overdue invoices. that credit control provides a professional outsourced credit control service to help UK business owners follow up on late payments and chase outstanding customer invoices. We hope this article was helpful. Find out more about that credit control or contact our team to talk more about our services and how we can help.