The “Why” of the late payment culture.

13th May 2019.

We often discuss on this site “what” of “what to do about the late payment culture” or the “How” of “how to bring to bring about change but do we ask the “why” of late payment?

Simon Sinek’s wrote the 2011 bestseller “Start with Why” (

His ted talk is the third most viewed Ted talk You might remember it by the oft-repeated mantra: “people don’t buy WHAT you do, they buy WHY you do it!”

Ted Talk

Simon proposes we make decisions by thinking in this order:

  • Why do we do what we do?
  • How do we do it?
  • What do we do?

We all know what we do, some know how we do it, very few know why we do it.

We all know most businesses pay late, some of us understand how they delay and slow down payments, but do we understand “why” do businesses pay late?

Most people agree that the slow and late payment culture in the UK damages business, slows down the business cycle and and as a result holds back and damages the national economy.

Research from Begbies Traynor showing the desperate financial situation that many UK businesses are in.

But is this a deliberate act or the result of business inefficiency?

The government,  the Department for Business, Energy & Industrial Strategy (BEIS), the Small Business Commissioner, the Federation of Small business (FSB), the Institute of Credit Management, the Institute of Directors, in fact most large business organisations all talk about tackling late payments and the need to fight the late payment culture.

Many focus on big companies and feel that if big business can be made to pay quicker then with a form of trickle down economics, then better payment practices will spread.  The consensus appears to be that big business is actually the problem and that there is a correlation between size and poor payment practices.

But are smaller businesses really better payers?

The argument goes that mall businesses only pay late out of necessity. If large businesses paid their small business suppliers on time, they in turn would pay up their suppliers on time and so on.

Reporting Payment Practices and Performance Regulation

Therefore there is the push by government on reporting payment practices by Big business with the Reporting Payment Practices and Performance Regulation (“RPPR”) which requires busineses over three years old whose turnover in the last two years was over £36 million and their balance sheet over £18 million to report on their payment practices.

The reports show payment statistics. The average time taken to pay invoices and the percentage of payments paid within certain time frames and the percentage of invoices paid late.

It also reports on their payment terms and gives a host of information regarding their payment polices. At the bottom of this page is an example of a published report.

You can find reports here:-

Fact is though that most are unaware of RPPR.  And does it actually make any difference? If businesses are unaware of them then they are not going to check the RPPR report.

Even if they do know about them, and go to the trouble of checking the reports, are companies going to choose not to trade with a big business because it has poor payment practices?

If not, really what value does RPPR really have?

The “Why”

The question is, do companies have poor payment practices on purpose?

Or is it just a result of inefficiencies and bureaucracy?

From the outside, it seems as if the slow and late payment practices of many big companies are a controlled and planned act. It seems that the payments department is set up with the purpose of delay.

However the larger an organisation becomes, the more complicated its payment process is going to be. The harder it is to find an individual responsible for making sure the payment is done. Invoices move slowly through the process and trying to affect the speed is a hard job.

As a debt collector, the regularity of the excuses we see, the way in which you are passed from desk to desk and told the same thing over and over, does lead you to the conclusion that it is delay by design.

Looking at the published reports, they help us identify companies that regularly are unable to process invoices for payment within a reasonable time.

But they also show organisations are simply imposing  longer credit terms to hide late payment from the statistics. By extending their standard terms, the stats on late payments are improved but suppliers still have to wait ages to be paid.

Our conclusion is that it is a combination of both. There is an element of business inefficiency but there is also a desire to squeeze suppliers for time in order to maximise cash flow management. The extended terms have no legitimate business reason, it’s about keeping the money in the hands of the big company and delaying as long as possible the payment to the small supplier. The issue is complex and is more than a binary problem.

Big companies are not going to change out of the goodness of their hearts. There is no desire to solve the problem for PR or altruistic reasons. And why would they?

Yes big companies will do enough to avoid a public shaming but why go beyond that?

In most companies, if there is a will to do something, then it gets done.  If companies really wanted to pay their suppliers on time then the statistics would be in the high 90s and they wouldn’t be imposing payment terms of 60, 90 or 120 that are hard to justify.

Late payment legislation says that the maximum terms should be 60 days unless there is a good business case. You can agree a longer period than 60 days for business transactions – but it must be fair to both businesses. Funnily enough, many companies have a default of 60 days but often find “good reasons” why their suppliers should agree to longer terms.

Why can’t businesses pay for a supply they have received within days or weeks of an invoice being submitted?

What real justification is there for 60 day terms other than cash flow management?

Clearly  systems and processes could be improved. Particularly in the case of the larger companies, who should be able to invest in automated accounts payable processes. Authorisation processes can be streamlined. Purchase orders can mean invoices are authorised before they are even received. Automated communications between companies can allow for invoices to be automatically uploaded and matched to purchase orders, thus reducing errors and removing the need for data entry.

But there needs to be a willingness, no actually a desire to do speed up the payment process.

So the conclusion has to be that the “Why” behind the late payment culture really is cash flow management and the lack of will to replace late payment with other more traditional ways of boosting the working capital sloshing through the coffers.

So long as paying suppliers late appears to be free, nothing will change.

RPPR unfortunately is a weak response to an important issue.

It carries no real penalty and therefore has no real effect.

CPA has long argued that public shaming and hitting businesses in the pocket is the only real way to change behaviour.

Recently the small business commissioners named and shamed some companies it had investigated, and the Prompt Payment Code expelled 17 contractors from its books. That’s a reputational hit, and is a start but to tackle the late payment culture across the UK business scene, more direct action will need to be taken to businesses off it delayed payments as a way to boost cashflow.

CPA knows that late payment penalties rarely work as the need for goodwill between companies stops it being utilised. However we see a way it can be used retrospectively to really affect change. See our blogs below.

CPA practices what it preaches

The Credit Protection Association has a policy of turning round invoices as quickly as possible and paying our suppliers as soon as the invoice is authorised. Many invoices are paid in the same week they are received. A large number the same day.

This is true, even if the supplier offers 30 days credit terms.

And we switched from paying most suppliers by cheque, to paying by bank transfer because we want our payment to arrive quickly and for it not to be unexpectedly delayed nor be a hassle to bank.


Because we are passionate about late payment and want to lead by example.

But what to do?

Read our blog here on how to crack down on the late payment culture.

Read our blog here on how to give late payers the slap they need.

Do you realise you may have hidden capital tied up in your business?

There is no need to run to banks of other finance providers for extra capital.

Do you realise you may have a hidden source of capital within your business waiting to be activated?

If you trade with other businesses and were often paid late then you could be entitled to significant compensation.

Under little known and underused legislation your business could be due huge amounts in compensation that you didn’t even know about.

For years the businesses you sold to were ignoring rules on payment. Now you can be recompensed  for their ignoring rules and paying you late.

That compensation could be the cash injection your business needed.

Are you  thinking about retiring, closing the business down or going into insolvency?  If so this compensation could be an excellent way to maximise the return you get for their years invested in the business.

If you collect the compensation you are due on late payments then you could create a nice nest egg from the business or find the funds to rescue it from insolvency.

How can CPA help?

CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hardwork. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.

The Credit Protection Association plc (established 1914) has spent 3 years researching the accounting, technical and legal implications of Late Payment Legislation and our staff and retained solicitors probably have as much working knowledge of this legislation as could be found anywhere.

We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.

Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.

CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.

The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit.  You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.

We do the work, you receive the cash.

If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.

We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.

We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.

CPA is passionate about late payment

The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.

We are passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs with cash flow difficulties being the single biggest killer of Britain’s small businesses.

If you were regularly paid late we can help. Those former customers used you to boost their own cash-flow, regularly paying you late.

As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.

Under little used legislation, you are entitled to compensation for those late payments.

Now you can boost your own cash-flow.

CPA can help unearth the those hidden treasures.

We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.

Yes, CPA can help you boost your business cashflow.

Don’t let your bankers control you,  contact CPA today.

Read our blog here on how to crack down on the late payment culture.

Read our blog here on how to give late payers the slap they need.

visit our late payment compensation page

See our full blog and FAQ on late payment compensation

Do you have a problem with late payments?

The Credit Protection Association can help!

Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.

At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.

We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.

Companies in trouble usually have very bad bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.

If you supply to businesses on credit help us help you identify the risks. Spot those companies ignoring rules on payment and treat them appropriately.

Why use a third party collector?

As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When you customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.

Over the years we have collected billions in overdue invoices for our customers.

Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections

Ready to speak to an advisor?

For help or advice on credit management, entirely without obligation.

Call us today

0330 053 9263

The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!

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Example of Reporting on Payment Practices report – Report by British Telecom

This report was filed on 26 April 2019

Payment statistics

Average time taken to pay invoices: 52 days

Invoices paid:

  • within 30 days: 10%
  • in 31 to 60 days: 51%
  • in 61 days or more: 39%

Invoices due but not paid within agreed terms: 8 %

Payment terms

Shortest standard payment period

42 days

Longest standard payment period

60 days

Standard payment terms

BT Group standard payment terms for contracted suppliers are 60 days from receipt of a valid invoice, for off-contract this is 42 days. Some suppliers have mutually agreed non standard longer terms (maximum 120 days) and others have agreed shorter non standard terms (e.g. Government contracts on 30 days). (Link to BT Payment Practices)

Were there any changes to the standard payment terms in the reporting period?


Maximum contractual payment period agreed

120 days

A small number of suppliers in specialist industry categories e.g. devices, have mutually agreed to longer non standard payment terms than our standard payment terms (60 days). BT operates weekly, fortnightly, monthly payment run frequencies.

Any other information about payment terms

We offer Supplier Finance Facility to most suppliers. Refer

Dispute resolution process (Link to BT Payment Practices)
BT Group have standard dispute resolution process across all suppliers payments. First point of contact is Accounts Payable, through contact points on website see link.

Other payment information

Has this business signed up to a code of conduct or standards on payment practices? If so, which?

For example, signatories to The Prompt Payment Code must commit to paying 95% of their invoices within 60 days.

Yes – Prompt Payment Code

Does this business offer e-invoicing in relation to qualifying contracts? This is where suppliers can electronically submit and track invoices. It’s not just allowing suppliers to email them an invoice.


Does this business offer supply chain finance? This is where a supplier who has submitted an invoice can be paid by a third-party finance provider earlier than the agreed payment date. The business would then pay the finance provider the invoiced sum.


Under its payment practices and policies, can this business deduct sums from payments under qualifying contracts as a charge for remaining on a supplier list?


During the reporting period, did the business deduct sums from payments as a charge for remaining on a supplier list?