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How Large Companies Pay

Report Lifts the Lid on Poor Payment Practices by Large Companies

May 2018

A new report published by debt collection and outsourced credit control specialists, My Credit Controllers Ltd, exposes unfair payment practices inflicted on smaller suppliers by some of the UK's largest businesses. The updated report now covers six months worth of data and submissions by more than 1,700 companies.

Concerned by the harm being done to small and medium sized enterprises (SMEs) by late payment, the government introduced new rules that mean large businesses must publishh information on how quickly they pay suppliers. The authors of the report have analysed submissions made in the first six months of the scheme covering companies with household names such as Boots, Carphone Warehouse, JD Wetherspoon and Center Parcs.

  • DS Smith Recycling, which retains its position as number one worst paying company, imposes incredibly long standard payment terms of 94 days, but then takes nearly three weeks longer on average to settle its bills. Other subsidiaries of DS Smith Group were also prominent among the worst paying companies. Had the ranking not excluded other group members, they would have made up five out of the top twenty worst paying companies.
  • The international export arm of high street favorite Boots takes the number two spot. Boots International Ltd takes an average of 98 days to pay suppliers, with 76% of invoices paid later than 60 days
  • With famous soft drinks brands like Robinsons, J2O and Tango, and a group turnover of 1.5bn you might think that Britvic Soft Drinks Ltd would not need to squeeze suppliers, but it makes number eleven in the list, paying only 3% of invoices in under 30 days, with 87% unpaid for more than 60 days.
  • Aston Villa may only rate a place in the Championship, but they're within striking distance of Champions League qualifying in the table of poor-paying companies, coming in at number seven. The football club takes 89 days on average to pay its suppliers, with one third of suppliers having to wait beyond the agreed time for payment.

See the rankings of best and worst paying companies in the full report here

More troubling for the government is that the report shows that only 5% of large companies have signed up to its voluntary Prompt Payment Code, and that these companies are amongst the worst payers. Three out of the top twenty worst paying companies were signatories of the governments Code, including one company that pays more than 90% of its invoices beyond the agreed terms, and another that takes nearly 90 days on average to pay suppliers.

Stuart Elmes, Director of My Credit Controllers and one of the reports authors said:

"Our analysis found that 8% of Prompt Payment Code signatories have an average payment time longer than 70 days, whereas only 4% of companies in the whole sample took this long to pay suppliers. It looks like the Prompt Payment Code is being used by some companies as a fig leaf to cover up a lack of meaningful action on this important issue."

Another controversial practice has been the extraction of payments from small suppliers just to remain on a suppliers list. One percent of companies were found to have taken payment from suppliers in this way. Many of these were in the food industry, suggesting that even if the supermarkets have cleaned up their acts on this practice, other businesses in the sector have not.

Commenting on this finding, Elmes said:

"This clearly illustrates the way that payment practice propagates down through the supply chain, as companies bear down on their own suppliers to offset payment pressures from powerful customers. Of course where it all ends is when it reaches the smallest businesses that do not have the scale to impose their own terms on suppliers. It is immoral that the least able to pay are being forced to help the finance directors of our largest companies flatter their balance sheets by giving them what amounts to interest free finance."

You can read the full report here.

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