Accountancy and Tax

Payment Behaviour Analysis: Accountancy and tax Sector

This report sets out to analyse the payment behaviour of 47 organisations operating within the Accountancy and tax sector. The data reveals a distinct dichotomy between a highly efficient majority and a small but significant minority of severe late payers. The central tendency of the sector indicates a generally prompt payment culture; whilst the average (mean) payment time stands at 30.3 days, the median is significantly lower at 24 days. This discrepancy suggests that the mean is being skewed upwards by extreme outliers rather than reflecting the typical operational standard. With a heavily London-centric dataset—where 30 of the 47 companies are located in the capital—it is evident that the dominant payment practices are driven by South East and London-based business models, which largely favour rapid settlement cycles.

A granular examination of the distribution demonstrates that the sector is organised around a fast-payment model. A substantial 70.2% of the companies analysed (33 entities) settle their accounts within the 0-30 day window, which is widely considered the gold standard for healthy cash flow maintenance. Furthermore, the interquartile range is relatively tight at 16 days, with the 25th percentile settling at 18 days and the 75th percentile at 34 days. This indicates that amongst the core majority of businesses, there is high predictability and consistency. Notably, 14 companies specialise in exceptional efficiency, categorised as top performers with payment times of fewer than 20 days. The fastest payer in the cohort settled invoices in a mere 4 days, setting a benchmark for best practice within the industry.

However, suppliers must realise that statistical averages can mask underlying risks. Despite the favourable median, the standard deviation is notably high at 29 days, highlighting significant volatility at the edges of the dataset. Whilst there is a 'hollow middle'—with zero companies falling into the 46-60 day 'Slow' category—a concerning tail exists at the far end of the spectrum. Two companies are classified as 'Critical', taking over 90 days to pay, with the single slowest payer recording a staggering 195 days to settle debts. This severe delay contributes to the 23.2% of payments classified as 'late' (exceeding agreed terms or reasonable standards), creating a potential liquidity trap for vendors who do not conduct adequate due diligence.

In summary, whilst the Accountancy and tax sector generally displays positive payment behaviour, with 77.2% of businesses paying within 30 days, the landscape is not without peril. The gap between the fastest payer (4 days) and the slowest (195 days) is immense. Consequently, credit controllers should not become complacent; they must continue to scrutinise new accounts rigorously. The data suggests that if a company does not pay within the standard 30-45 day 'Moderate' window (occupied by 21.3% of the sample), they are likely to default to a significantly longer timescale, as evidenced by the leap to the 60+ day category. Therefore, active credit management remains essential to mitigate the minority risk within an otherwise efficient sector.