UK Retail Sector 2023

Payment Culture in the UK Retail Sector

In recent years, UK retailers have been under scrutiny for their payment practices towards small businesses. Late and slow payment has become a significant challenge for many small businesses in the UK, resulting in cash flow problems and even insolvency.

The issue of late payment has become more critical in recent times, especially with the COVID-19 pandemic’s economic impacts. According to a survey by the Federation of Small Businesses (FSB), 50% of small businesses reported being paid late by their clients in 2020, with retailers being the worst offenders. This delay in payment can have significant implications for small businesses, such as inability to pay suppliers and staff, disrupted cash flow, and lack of funds for growth.

Small businesses have fewer resources and less bargaining power than large retailers, making it difficult for them to challenge unfair payment practices. Many retailers use their bargaining power to negotiate longer payment terms, which can leave small businesses in financial distress. Some retailers even use their power to force suppliers to accept discounts or agree to unreasonable payment terms. Late and slow payment also creates a negative cycle of delayed payments, where small businesses are forced to delay payments to their own suppliers, causing the problem to spread across the supply chain.

Looking at the UK Retail sector payment culture this year versus last year, we see the same names in the slow payer list, including many High Street names including TK Maxx, Waterstones, Halfords, Argos and others. Telefonica O2 seems to be in a slow paying league of its own.

The fast paying retailers again feature the same names as last year, but include Next, Primark, House of Fraser and Lakeland.  As we see in some other industries, there seems to be no logic other than choice regarding how fast or slow these retailers take to pay. What is clear, however is the worst are getting worse, with 10 out of the 12 slowest payers getting slower, and 11 out of the 12 fastest payers paying faster. 

In conclusion, late and slow payment by UK retailers poses significant challenges for small businesses. 

Avg days Feb 2022Avg days Feb 2023
Telefonica O2104109
TK Max7677
Holland & Barrett5363
The Carphone Warehouse5662
Ann Summers6161
Sports Direct3929
Boots UK 3028
Virgin Mobile3828
Jones Bootmaker2626
House of Fraser3823
Body Shop International209

How long do your customers take to pay?