Regulator concerned by payment times from big companies to SMEs

There’s been no improvement in the time in which big businesses pay their small business suppliers, according to the newest data from the Payment Times Reporting Regulator.

The regulator recently released its latest half-yearly report – the third in its history since the Payment Times Reporting Act 2020 was legislated – and revealed that payment times have remained largely unchanged across the three reports:

• Report 1: Average payment time = 36.29 days (six months to June 2021).
• Report 2: Average payment time = 35.61 days (six months to December 2021).
• Report 3: Average payment time = 35.66 days (six months to June 2022).

The third report found that only 31% of big businesses pay their small business suppliers within 30 days, while 24% take more than 120 days to pay.

“After three reporting cycles, it is concerning that register data indicates payment terms and payment performance have not materially improved since the commencement of the scheme,” the regulator said.

"This year, we will increase our engagement with reporting entities and stakeholders to help us better understand barriers to compliance. 

“Because payment practices have not improved across recent reporting periods, we will also explore how the register can be used by small business suppliers, investors, advisers, supply chain managers and other stakeholders to incentivise improved payment performance by large businesses.”

Ombudsman demands big businesses lift their game

The small business ombudsman, Bruce Billson, said the latest payment times report made for “bitterly disappointing” reading.

“Nearly one-quarter of big businesses taking four months or more to pay their bills is just not acceptable and there is little sign of improvement by the worst performing businesses,” he said.

“This needs to be taken more seriously. Finance is the oxygen of enterprise. Cash flow is vital to these small and family businesses. There is abundant scope for big businesses to lift their game and they should.”

Mr Billson said about 40% of the requests for assistance to the small business ombudsman related to payment times.

The Payment Times Reporting Scheme aims to improve payment times for small businesses. Under the scheme, big businesses and government enterprises must report their payment terms and times for small business. 

To find out how individual big businesses are performing, you can go to the Payment Times Reports Register and download an Excel file.