An engineering multinational in Aberdeen whose revenue last year was £5.48bn is among a number of big businesses named and shamed for paying invoices late.
Wood Group – which was founded by the billionaire oil tycoon Sir Ian Wood – is cited in new research by campaign group Good Business Pays.
Other companies named in a database include Mitie, which has a contract with the Scottish Government, Tennent Caledonian, and Cineworld, whose cinema in Glasgow is the tallest in Europe.
Good Business Pays is backed by the Federation of Small Businesses (FSB) which is calling for an end to a “chronic late payment culture that plagues our small business community and forces successful firms under”. FSB claims that 50,000 small businesses close each year due to cash flow problems. It also pointed out that the Scottish Government aims to pay invoices within 10 days which it described as “excellent practice”.
Tennent Caledonian Breweries – one of the firms named – said in reply that Covid-19 had caused problems with payments.
Good Business Pays is campaigning to get big businesses to change payment practices and commit to paying suppliers quickly. It argues there is no excuse for late payment due to “new instant payment technology”. There have been issues due to some firms unilaterally changing payment timescales from 30 to 60 days, for example.
Small businesses know only too well the anxiety caused by slow and late payments – hitting your cash flow, hammering your plans, and, all too often, causing businesses to fold.
Good Business Pays
The campaign group used data published by the government and combined it with surveys to produce charts and metrics on the payment performance of many large UK businesses.
They included the Wood Group, based in Aberdeen, which operates in the oil and gas sector. According to the data, the company paid 65 per cent of invoices late. Sir Ian Wood left the Wood Group in 2012.
Tennent Caledonian – which makes lager and beer – took 120 days on average to pay an invoice, and 53 per cent of those were “not paid within agreed terms.” The Glasgow based firm was the second worst payer, according to the data, coming second behind Meggitt PLC, a science and technical firm based in Coventry which took an average of 132 days to pay an invoice
Mitie – which helps the UK Government to deport asylum seekers, among other state contracts including providing services to Marine Scotland buildings – took 34 days on average to pay an invoice. Good Business Pays found that 35 per cent of these invoices were “not paid within agreed terms”. Cineworld took 49 days on average to pay an invoice.
Big Business vs. Small Business
Good Business Pays said: “Small businesses know only too well the anxiety caused by slow and late payments – hitting your cash flow, hammering your plans, and, all too often, causing businesses to fold.”
Andrew McRae, FSB’s Scotland policy chair, said thousands of “good Scottish businesses go bust every year” because of late payment, and he claimed this “long-term” problem could “hamper” the UK’s recovery from Covid-19. He added: “That’s because many smaller firms don’t have the resources to wait for big companies to do the right thing and pay up.
“We need to see more effort from governments north and south of the border to help us end the chronic late payment culture that plagues our small business community and forces successful firms under. But there’s also a strong argument that our biggest businesses need to step up and treat their smaller suppliers with greater respect.
A spokesperson for Tennent Caledonian said: “Overdue payments are higher than normal owing to agreed payment extensions secured with suppliers, as a consequence of the Covid-19 pandemic. It has not been practical to quantify the effect of these extensions on overdue balances, so reporting is based on original due dates.”
Mitie said: “We appreciate the importance of being paid accurately and on time. We’re in full compliance with the Prompt Practices and Reporting Regulations as set out by Government, with several legal entities impacted by the regulation reporting that over 96 per cent of invoices were paid within 60 days.”
Wood Group and Cineworld did not reply to our requests for a comment.
This story was updated at 07.50 on 23 September 2021 to add a late comment from Mitie.
Photo Credit: iStock/Kanizphoto
