UK and Ireland among top five worst in Europe for payment delays

New data from Sidetrade has found that the UK and Ireland are among the top five worst in Europe for payment delays.

The company statistics are based on the payment behaviour of 20.7 million buying companies worldwide.

The data reveals the best and worst markets and industries for late payments over the last three years finding that on average, companies around the world pay supplier invoices 21 days late – taking the length of time between an invoice being issued to getting paid, to a total of 53 days on average.

Scandinavian businesses tend to pay the quickest overall, in particular Sweden, with a delay of just 7 days, well below the global average.Over two years on from the start of the pandemic, the US, France, and Italy still haven’t fully reverted back to their pre-pandemic unpaid invoice rates according to the Sidetrade Unpaid Invoice Tracker. Conversely, Belgium, Spain, the UK, and the Netherlands now have better unpaid invoice ratios than before the start of the pandemic.

France holds the title for the worst amongst the seven countries tracked, with 25% of the value of all overdue invoices as of April 16, 2022.US companies rank tenth globally for longest payment delays, with a mean of 27 days. The industry with the shortest payment delays in the US is Manufacturing: 22 days. The worst industries are Financial Services & Insurance, and Leisure & Hospitality: 30 and 31 days, respectively.Across Europe, there are significant disparities in payment delays from country to country, ranging from 7 days (Sweden) to 26 days late (Ireland).

On average, it takes companies in Europe 45 days to collect payment – a mean delay of 16 days. Companies in the UK and Ireland are among the top four worst in Europe for payment delays, with means of 21 and 26, respectively. This is despite both countries having higher payment terms (34 days in the UK, 31 days in Ireland) than the European average of 29 days.

In the UK, the industries with the shortest payment delays are Utilities & Energy at 19 days, and Retail & CPG at 20 days. Industries in the UK with the longest payment delays are Financial Services & Insurance at 25 days, and Public Services, HR Services and Transportation & Logistics at 24 days.

Looking at the Sidetrade Unpaid Invoice Tracker, almost all UK industries appear to have recovered from the pandemic in terms of late payments, most showing pre-pandemic unpaid invoice rates. The exceptions are, Public Services, Other Services and the Food industry. The latter has risen from 14% at pre-pandemic levels, to 21% of invoice values being deemed late (10+ days after their due date) as of 16 April 2022.

France is amongst the worst-performing European countries for late payments. Their sectors with the shortest payment delays are Retail & CPG, and Manufacturing, both at 17 days. The worst industries in France for late payments are Leisure & Hospitality, and Public Services at 24 days. France still hasn’t recovered from the Covid-19 crisis when it comes to late payments. The rate of unpaid invoices across every industry in France is still above the pre-pandemic level, at 22.7%.

The Sidetrade data lake is the result of years of hard work of collecting, cleaning up, matching, and enriching huge volumes of data. Transactions between Sidetrade’s customers (the suppliers) and their buyers are aggregated, anonymised, and layered with algorithms to determine a predictive payment metric for each analyzed buyer company. This is the engine behind Sidetrade’s AI technology. It takes decision-making support to the next level, providing data-based.

Josie Dent, Managing Economist at Centre for Economics and Business Research (Cebr):“After the hit businesses took during the pandemic and lockdowns, which caused a significant rise in late payments, the global economy is now experiencing a new source of pressure. Across the world, inflation is accelerating, driven by energy prices and supply chain disruptions. While both of these factors were already at play at the start of the year, the conflict in Ukraine and sanctions on Russia, as well as recent lockdowns in key Chinese cities have further added to the inflationary environment and the outlook for price growth. These increasing costs for fuel, energy and raw materials add to businesses’ financial strain at a time when many are still recovering from the pandemic, making late payments more likely.”

“Therefore, as businesses’ bills come due, often at higher prices than previously, many will find themselves having to prioritize which they can afford to pay immediately, and which will need to wait.”

“In the US, consumer price inflation rose to 8.5% in March, up from just 2.6% a year earlier. In the meantime, the average share of unpaid invoices by value rose from 14.5% on 31 March 2021 to 17.5% on the same day in 2022. Businesses will also be affected by the Federal Reserve’s interest rate rises expected this year. In March, the Fed voted to increase interest rates for the first time since 2018, with projections pointing to a further six rate rises in 2022 alone, raising costs for those with debt.

“Businesses in other countries are also facing rising costs and interest rates. The share of late payments by value stands at 24.7% in France in the latest data (16th April), compared to 21.0% at the start of the year, while inflation picked up to 5.1% in March.”

Sidetrade CEO, Olivier Novasque, said “Protecting and accelerating cash flow has never been so critical as bad debt risk and inflation are dramatically increasing everywhere. This can best be achieved if companies harness enough customer behaviour data and become more forward-looking. Data science and artificial intelligence are essential to fighting against late payment. Since each buyer’s payment behaviour is different, a dedicated and automated collection strategy is needed to be efficient.”

“We’re delighted today to offer a first look into the Sidetrade Data Lake and bring the power of true AI to companies at a time when they need it the most.”