With recent news that five of the largest high street retailers in the UK have been paying suppliers late 80% of the time, the problem of unpaid invoices isn’t going away. The five companies consist of John Lewis, Alliance Boots, Home Retail Group, Marks and Spencer and Kingfisher. Its part of a wider trend in the industry that means smaller suppliers are left waiting to receive money for work they’ve already done. The sector average for late payments is 69.8% but these businesses were worse than average, paying late 82.9% of the time.
The news emerged not long after Tesco’s relationship with its suppliers was scrutinised by the Groceries Code Adjudicator in a lengthy report, revealing how it had withdrawn payment to suppliers to make financial reports look better.
It reiterates the need for invoice insurance so that businesses can protect themselves in the case of client insolvency and protracted default, and make sure they are paid for the work that they do.
The situation for smaller businesses is also tough as they usually rely on larger corporates for such a sizeable chunk of their income. However it’s clear from these examples that late payments are not a simple mistake. They are being used as a tactic by larger size retailers. The UK situation also compares badly to the rest of Europe. The average pay day for suppliers across all sectors was 0.3 days late in Europe compared to 6 days in the UK. On average, only 40% of invoices in the rest of Europe are paid late but in the UK it’s a fifth higher at 60%.
Under new legislation that came into action in the UK this April, larger firms now legally have to publish late payment details twice a year in April and October. This is part of updated government policy and is coupled with the launch of a website set up by the Department for Business, Energy and Industrial Strategy where the statistics can be accessed by the public. If companies fail to produce the appropriate information, they may be criminally pursued by the government and could face fines.
Whilst government policy is moving in the right direction, the retail industry still needs to catch up.
Let’s hope the retail sector improves, but in the meantime it makes better business sense to insure your invoices with InvoiceInsure. Grow your business with peace of mind, safe in the knowledge that any money you’re owed due to client insolvency or protracted default will be returned back to you.
We’d be delighted if you get an invoice insurance quote for by clicking the link below – it’s a simple process and won’t take long.