Late Payments Epidemic Continues To Have Ripple Effects In Europe

Late Payments Data Digest

The data show that late payments continue to have significant impact across the UK – and firms are devoting at least one work week a year chasing down monies owed.  The impact is especially keen among smaller suppliers.  Recent suspensions from the Prompt Payment Code have come from the infrastructure industry.

The late payments epidemic continues — with particular impact in Europe.

As seen below, PYMNTS offers up findings from around the globe on late payments — including reach, scale and financial impact.

Forbes noted this past week, that in the United Kingdom, per data from Previse, larger companies are paying their smaller suppliers more slowly than they are paying their larger suppliers. Previse has estimated that businesses, on average, pay their smaller suppliers 30 days later than they do larger suppliers. The company has analyzed 10 million invoices spanning 24 billion pounds of spending by large companies.

The findings show that suppliers billing less than 10,000 pounds annually do not have invoices processed until 35 days after paperwork is received. Thus, payment is late even before the invoice is approved. For the larger suppliers, invoices take just three days to process. The financial publication noted the government has estimated that the average time to pay invoices now stands at 37 days in the U.K., beyond the 30-day period recommended.

A separate report by Intuit QuickBooks found that in the U.K., small businesses are spending about 56 million hours a year to chase down overdue payments. The firms are taking about one week a year to address late payments, according to the Intuit research. The time spent to get those payments is worth more than 6 billion pounds, and more than 11 percent of those outstanding payments were more than 200 days late.

Drilling down a bit, in the U.K. in November, a number of businesses within the construction sector have been suspended from the Prompt Payment Code in the wake of having failed to pay their suppliers on time. The businesses include Eurovia Infrastructure Limited; Kier Integrated Services Limited; Kier Infrastructure and Overseas Limited; Kier Construction Limited; and Kier Highways Limited.

The moves bring the number of companies suspended to about 20, Highways Magazine reported.

“Eurovia Infrastructure Limited is a subsidiary of Eurovia U.K. Limited and is one of our contracting legal entities in the U.K.,” a spokesperson for Eurovia told the outlet. “We fully recognize the importance of complying to the Prompt Payment Code, taking the responsibility for paying our supply chain very seriously.”

Elsewhere, and on a larger scale, Western Europe might see its inaugural increase in insolvencies in several years, to the tune of 2.7 percent. That comes amid macro-level pressures, such as the U.S.-China trade war and Brexit. In addition, as reported, citing Atradius, payment practice data show trade credit is on the rise. Atradius estimates that companies in Western Europe transacted more than 60 percent of total sales value to B2B customers on credit, up from 41.4 percent last year.

And, the company said, 30 percent of the total value of those B2B invoices were unpaid as of the due date. Breaking that down a bit, the highest tally of unpaid invoices comes in at more than 35 percent in the U.K. and nearly 35 percent in Greece. The lowest percentage was seen in Denmark at a bit more than 20 percent.

A bit closer to home, a digital bank that raised $110 million from investors — through a roster that includes actors Leonardo DiCaprio and Orlando Bloom — is finding it a challenge to raise additional funding.

The bank, Aspiration, which allows customers to choose how much they pay in return for the services they receive, had been seeking a Series C funding round earlier this year, as noted by Co-Founder Andrei Cherny. The funding round, per CNBC, at $200 million, would have valued the company at $1 billion.

But it has been a challenge to get investors onboard, and the company has had to lay off as much as 15 percent of its staff and has been, according to unnamed sources, withholding some payments to vendors. The digital bank said that it has more than 1.5 million U.S. customers and has made a hallmark of being socially responsible as it invests customer deposits.