UK SME manufacturers forced to wait longer for invoices to be paid
Smaller UK manufacturers are forced to wait nearly twice as long as their larger competitors for invoices to be paid, research from the Asset Based Finance Association (ABFA) - which represents the asset-based finance industry in the UK and Ireland - shows.
SME manufacturers waited an average of 67 days for invoices to be paid in 2015, whereas the largest manufacturing businesses, those with a turnover over £500m, waited an average of just 38 days.
The ABFA added that the difference in waits for payment between SMEs and the biggest manufacturers has increased over the last year. The delay in SME manufacturers receiving payment remained level at an average of 67 days, contrasting with the largest manufacturers who saw their average wait decrease bynine percent, down from 42 days in the previous year.
The ABFA suggests that the figures indicate the issue of late payment, and poor payment practices more generally, has become increasingly ingrained in business practice and is now endemic across many sectors.
In addition to late payment, the ABFA explains that it is increasingly common for large businesses to seek to impose extended payment terms in contracts with their SME suppliers.
Jeff Longhurst, Chief Executive of the ABFA, said: “Unfortunately, for many SMEs in the manufacturing industry, waiting more than two months to be paid is now a normal state of affairs.
“During the recession some businesses looked to increase their payment terms in order to give themselves breathing space in the tough economic climate. Unfortunately, in many sectors there’s been a cultural shift and delaying payment to suppliers is now common practice. Larger businesses need to treat their smaller suppliers more fairly.
“Late and extended payment times are deep-rooted issues in the manufacturing industry. This doesn’t just impact on the business in question; they need to pay their own suppliers and so there is a cumulative negative effect down the supply chain.
“Late payment of invoices and other poor payment practices have a significant impact on the UK’s competiveness and ability to attract further investment to the sector.”