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Late payers named and shamed in league table

Carillion, Speedy Hire, the Wolseley Group and the BSS Group are some of the worst offenders for paying their bills on time, according to their rankings in the Payment League Table (PLT).

Carillion, which reported a 31 per cent full-year profit rise last week, was placed among the 25 worst FTSE 100 and FTSE 250 firms. On average, it took 80 days to settle its invoices, eight days more than Speedy Hire, which took 72. 

The BSS Group took 63 days to pay its bills. Wolseley took an average of 59 days. The average creditor days figure across all FTSE 100 and FTSE 250 listed companies is 34 days.

Interserve, the services, maintenance and building group, was named one of the best payers in the FTSE 100 and FTSE 250 table, taking just three days settle its invoices.

Interserve, the services, maintenance and building group, was named one of the best payers in the FTSE 100 and FTSE 250 table, taking just three days settle its invoices.

The PLT, which was published last week, is a joint venture between the Institute of Credit Management (ICM), the Credit Management Research Centre (CMRC) and CreditScorer. The payment data is updated as soon as each company files a new set of full accounts with Companies House, the CRMC said.

Justifying its decision to name and shame firms indulging in poor payment practices, Philip King, ICM’s director-general, said: “This is publicly available information, which has never been collated before and which is now being kept in one place.

“It acts as a useful guide to the credit profession and it keeps other companies informed about how a particular company behaves with regards to payment.”

'Payment terms in respect of individual suppliers are commercially confidential' - Carillion                        

“The overall Group number is quite meaningless in this context given that Wolseley operates in 28 countries and therefore the picture varies significantly by custom.

 

“Of course, negotiation of payment terms is a matter of individual negotiation with each of our suppliers and is always a balance between our need for effective cash management and paying our suppliers within a reasonable timeframe. However, we don't believe that Wolseley is significantly out of line with the rest of the industry,” - Wolseley

'Speedy Hire's payment cycles are standard for the industry in which we operate and we have excellent relationships with our suppliers. The Group's average figure for 'payment to suppliers' has remained consistent year on year.' - Speedy Hire                     

Mr King said he believed the table, the first of its kind, could aid in altering the behaviour of some of the poorer payers. “Large companies that appear on this list will want to be recognised for adopting good practices,” he said. 

“Their rankings will help them to develop and encourage the right sort of culture in their organisations. No business likes to seen as worse than any other so these tables will have some impact.”

Professor Rudi Klein, chief executive of the Specialist Contractors’ Group disagreed. “It’s good that late payers are named and shamed, and it’s good that firms are warned off getting involved with these companies,” he said.

“However, I’m not convinced that this table will lead to the desired changes in practices at these organisations that we want. When you look at construction, what becomes clear is that the biggest companies make 20 per cent of their margins through the interest earned on the money that they owe to their supply chains,” he explained.

“Late payment is deliberate and is a matter of commercial policy. The largest organisations don’t make their money by providing services. They do so by farming the work out to their supply chains: they make a significant part of their margins on the money they hold back.

“That policy will not fundamentally change unless we take the money out of their hands and move it into project bank accounts. Companies should be making money on the quality of the products and services they provide, rather than on their ability to manipulate cash from their supply chains,” Professor Klein concluded.

Rod Pettigrew, HVCA head of legal and commercial. “I’m disappointed to hear that construction features so prominently in this table. Our members often have to wait lengthy periods of time in order for payments to be made. Taking a long time to settle an invoice may suit some companies, but it does not reflect the needs of the sector.

 

“Firms must recognise that their work is done by their specialist contractors. They also need to realise the impact that late payment has on their supply chain.


 gavin slark
Gavin Slark,
BSS Group
chief executive, explains his
firm's philosophy concerning payment terms 


“Looking at our creditor days number in isolation is dangerous. In isolation, the number itself is meaningless because the payment of creditors is all based around the individual terms that you have with your individual suppliers.

“There’s a number of things that you have to add to that figure just to put some context to it. First of all, our debtor days – the amount of days it takes us to get the cash in from our customers. Currently, our debtor days stands at
58 days. And also the amount of working capital that we carry in the business by way of stock. We carry 60 days’ stock in the business as an average.

“When you look at the debtor days at 58, carrying 60 days’ stock in the business, then 63 days starts to have a little bit more relevance.

“It’s comparative to the individual supply terms that you have with your suppliers. Each week we’re processing thousands of invoices from hundreds of suppliers, some of whom are very small, some of whom we may only spend a few hundred pounds a year with and some of whom we spend up to a hundred million pounds a year with.


“The commercial terms on each of those purchases from each of the suppliers can be quite different. Those commercial terms have a whole myriad of different components to them, not just the payment days.


“Our relationship with our suppliers is critical to the success of our business. One of the differentiating factors that we have within our business is the relationship that we nurture with our suppliers. In the two-and-a-half years that I’ve been chief executive here, I’ve not had a single supplier raise an issue with me about our payment because our philosophy, as a business, is to pay to the commercial terms that we negotiate.”

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