In the United Kingdom, when it comes to late payments, size matters. To that end, a study by the U.K.’s Small Business (SMB) Commissioner Paul Uppal and Lloyds Bank commercial banking found that roughly two-thirds of larger firms pay late, taking more than 30 days to pay their bills.
The study, conducted across more than 7,000 firms, found that as much as 21 percent of those surveyed take more than 30 days to pay as well. Another 21 percent take more than 50 days to pay, and 2 percent stretch terms beyond 80 days. The average time to pay, across firms of all sizes and throughout the U.K., is about 37 days.
Of the larger firms that stretch the time it takes to get other firms paid, CIPS reported per Uppal, the practice is akin to using the supply chain to finance their business operations.
As noted last week, some observers have called for a traffic light system that will let smaller firms know when larger companies do not pay their bills in a timely manner. Uppal said he supports this approach. According to the site, he said, “Our ambition is to help small businesses make more informed choices when deciding which larger businesses they are going to trade with. A traffic light system would be a simple and effective visual way of highlighting which larger businesses are paying promptly and are working in partnership with their supply chain.”
As reported, large firms with at least £36 million (nearly $46.3 million USD) in turnover have been required to publish data on the timeliness of payments. Those figures are mandated by the Reporting on Payment Practices and Performance Regulations.
No Cakewalk On Payments For Patisserie Valerie
Separately, but also in the U.K., Patisserie Valerie has been questioned by the government over late payments, and said in a letter to lawmakers that it is “determined” to pay a series of as-yet unpaid invoices. The firm said through Nick Perrin, its interim head of finance, that it has been working through a “large backlog” of supplier bills. In addition, the missive to the Business, Energy and Industrial Strategy Committee said there still is “much to do.”
As reported, emergency funds were needed late last year after allegedly fraudulent activity was exposed and, along with a tax responsibility of more than £1.1 million, suppliers had gone unpaid. Management said the process could take several months.
In the United States, pharmaceutical giant McKesson has filed a complaint against Shopko, alleging that the retailer has not paid the company for pharmaceutical products. The $67 million sought by McKesson, as reported by Retail Dive, comes after Shopko has been amid restructuring for several weeks, and is in the midst of closing 39 stores.
McKesson stated that Shopko claimed it would get as much as $100 million from the sale of pharmacy operations to Kroger, yet it did not pay the pharmaceutical firm for drugs. Retail Dive noted that the Shopko locations are usually based in rural areas, and are the “only access” to drugs that many consumers have.
“We spent weeks attempting to work with Shopko’s senior leadership on repayment, while continuing to deliver medicine without receiving payment. Unfortunately, we were unable to reach a sustainable, long-term solution,” wrote a McKesson representative to Retail Dive.