Larger businesses increase smaller supplier payment demands

The credit management services business polled over 11,000 companies in 29 countries. It reported the business landscape as being under pressure from new uncertainty, whilst also struggling to recover from the impact of the Covid-19 pandemic.

Over two thirds (68%) of UK respondents said timely payment is crucial to sustain suppliers’ trust. Almost seven in 10 (69%) believed large businesses have a responsibility to reimburse smaller suppliers on time.

However, there was a nine percent increase in organisations who said large multinational companies have asked them to provide longer payment terms than they are comfortable with.

In 2021, the UK government enhanced the Prompt Payment Code (PPC), a voluntary scheme in which subscribers to it are obliged to pay 95% of invoices to small businesses within 30 days. This took effect from July 2021, prior to which it was 60 days.

Intrum’s report found over half of UK businesses (51%) pay suppliers later than they would accept from their own customers – despite a majority of six out of 10 businesses believing payment times are critical to sustainable business behaviour and should form part of required sustainability reporting.

The European average of businesses paying suppliers later than they would accept was 33%.

Eddie Nott, managing director for Intrum UK & Ireland, said: “Late payments are a perennial problem, but in the current environment it is worrying to see larger businesses increasing their demands on smaller suppliers.

“It is important to realise that faster payments and good business practices around payments enable businesses to take the action they need across a range of areas. While the Prompt Payment Code reforms are a welcome acknowledgement of the importance of timely payments, businesses are still suffering from poor payment behaviour.”