Dun & Bradstreet UK Industry Report – who pays their invoices on time?

Dun and Bradstreet publishes a quarterly UK Industry Report – it usually goes to their clients only, but we’ve managed through our sources to get hold of a copy for our readers. (Note to Her Majesty’s Revenue and Customs – you have no idea how much tax-deductible beer it takes to extract this stuff, you know)!

It looks at the general economic outlook, then at payment trends amongst UK companies, and it contains some fascinating material, even if in some cases it raises more questions than it answers.

The introduction is pretty scary, as D&B highlight the level of personal and corporate debt in the UK, and predict that the recovery will be “challenging”.  The global outlook is better, with growth of around 5% in 2012, but D&B believe that “short-term weakness could be greater than consensus expectation”.

We then get into the more specific measures of UK payment – D&B’s core business of course.  After a sharp drop off in prompt payments during April 2012, the trend has been improving – although it’s interesting to note that still only 25.8% of businesses paid their bills in a prompt manner in July according to D&B.  And “the outlook is uncertain for August, with early reports indicating that retail activity has dropped sharply in the Olympic period, reducing cash flows”. Business failures remain at a fairly high historical level, but numbers are reducing – one bit of good news at least.

There is also some interesting detailed data in the report. Why, for instance, are only 20.6% of businesses in the affluent South-East of England prompt payers, whilst 26.9% in supposedly tight-fisted Yorkshire settle their invoices on time?

And while we might have expected the construction industry to be poor payers, they actually are only just below the average – the real villains are the  Machinery Manufacturing and Consumer Manufacturing sectors, where less than 20% of firms in those sectors pay promptly.

There is also a very interesting classification of organisations into payment categories – a classic two by two matrix. We’ll come back to that at some point but it is worth a look, then think about how your suppliers perceive you in terms of your payment profile. Are you, in D&B terms, a “Cash Vulture”? Or an “Ideal Customer”?

Anyway, you can read or download the report here - dnbukindustryreportJuly2012edition. You don’t even have to register.

And by the way, if you’re not tracking the financial situation of your key suppliers on an ongoing basis via D&B – or one of their competitors – then you really should be. And I don’t mean just running off a quick credit check every three years, I’m talking about tracking of ongoing events and changes in the suppliers’ situation.  Even if you only do it for a handful of your most critical suppliers, it should be an essential part of every organisation’s supplier risk management strategy.

Voices (2)

  1. Chris C:

    Suspect canny Yorkshiremen are reading their supplier invoices and taking the offered prompt payment discounts….

    One useful backstop way to check infrequent suppliers used to be to read the receivers’ auctions in Industrial Exchange & Mart…

    I wonder how many organisations have IT systems responsive enough to actually allow them to pay on time.

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