B2B Payments

In UK, Late Payments Report Finds Fault With Big Retailers

Stretched payment terms got examination in the U.K., which found that some retailers, such as WHSmith and  Boots, are paying suppliers only after several months have passed. In Australia, late payments mean SMBs are spending significant sums to resolve late payment disputes through formal processes.

The scope of late payments in the United Kingdom continues to be illuminated across government reports. Among the latest is a report from the Business, Energy and Industrial Strategy Committee, or BEIS for short, that shows continued impact on smaller firms.

The report noted that, in the words of Rachel Reeves, who chairs BEIS, “supply chain bullying is all too commonplace” amid stretched payment terms, and High Street firms are among those deliberately paying late.

Among the names cited in the report, retailers WHSmith has payment terms that have stretched between 90 days to 120 days, and Boots has terms that range from 75 days to 120 days. Travel agency Thomas Cook took an average of 88 days to get suppliers paid.

Early payment discounts also hit smaller suppliers as there are prompt pay discounts levied, noted the report. By way of example, Boots has a 2.5 percent discount in place for its suppliers “regardless of size” and against that backdrop, suppliers state that the Prompt Payment Code, which is in turn administered by the Chartered Institute of Credit Management, has not  been effective. That’s in part tied to the fact that the code is voluntary. The BEIS recommendations state that there should be a 30-day statutory requirement for invoices to be paid within that timeframe, and that all larger firms be required to sign onto the Prompt Payment code. As noted by BEIS and via smallbusinessco.uk, the government will “miss its target” of steering 33 percent of its central government contracts to smaller firms by 2022. BEIS, in turn, wants the government to confirm how it will meet that target.

Separately, it has been reported in Australia that smaller firms in that country have been paying an average of $130,000 to resolve late payment disputes through formal means. This is, as reported by wideformatonline.com, citing the Small Business Ombudsman, doubles the average tally seen a decade ago. The numbers come from the results of the Access to Justice Inquiry, and per the Australian Small Business and Family Enterprise Ombudsman Kate Carnell, payment times are among the biggest issues in disputes. “We surveyed 1,600 small businesses across Australia and found time and cost are the most significant factors when determining how far to pursue resolution of a dispute. Our research shows 22 percent of small businesses surveyed had been involved in a serious dispute in the last five years. Small businesses in Australia are paying more than $130,000 to resolve a dispute through formal pathways,” said Carnell.

Of those disputes, nine out of 10 were for small companies that were defined as business to business disputes and one in 20 disputes were categorized as business to government disputes, as categorized by the government.

“Three out of five sought legal advice from a lawyer,” Carnell said. “At this point, the small business owner has to decide whether to pursue the dispute, as the expected costs of further action most often outweigh the potential gain. Half of those surveyed considered the amount of time and effort required was unreasonable.” The impact of those disputes in terms of finances can lead to business losses; Carnell also noted that reputations can be negatively impacted.

Also in Australia, the federal government has found that, as reported in the West Australian, government action is needed to address the damage regional economies suffer through late payments, specifically through mining companies. The terms stretch from 60 days to 90 days.  A House of Representatives report has found that businesses are unable to invest, boost employment or grow operations. “There is no doubt that large mining companies achieve a fiscal benefit from holding off payments to suppliers for products and services for longer than 30 days,” said the report, “however, the committee believes that this practice is short-sighted and does not ultimately benefit the mining sector or the communities in which it operates.”



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.