Payment Culture in the UK Aerospace & Defence Sector
Small businesses serving the UK Aerospace & Defence Sector are facing a significant challenge in 2023 – slow or late payment. These businesses are crucial to the growth and innovation of the sector, but they are often at the mercy of larger companies and government agencies that are slow to pay their bills.
One of the most significant challenges that slow or late payment causes for small businesses is cash flow problems. When payments are delayed, small businesses may struggle to pay their own bills and meet their financial obligations, which can lead to financial instability and even bankruptcy in extreme cases. This can be especially challenging in a highly competitive industry like Aerospace & Defence, where small businesses need to invest in research and development, equipment, and skilled staff to remain competitive.
Looking at last year versus this year, payments in general seem to be slowing in Aerospace & Defence. The usual slow-paying names of Meggitt, Roll-Royce and GKN appear again as the slowest payers in the sector. But they are joined this year by General Dynamics, where their average payment time has almost doubled this year. British Aerospace leads the way on paying suppliers faster, something they have been long committed to. They along with Babcock Land Defence have continued to improve of their results taking average payment times to 15 days or less.
In conclusion, slow or late payment is a significant challenge that small businesses in the UK Aerospace & Defence sector are facing in 2023. It can impact their cash flow, limit their growth opportunities, and harm their reputation. Small businesses must take proactive steps to manage their finances effectively to mitigate these challenges and ensure their continued success in the industry.