Banking

Payment Behaviour Analysis: Banking Sector

An extensive analysis of payment behaviour within the Banking sector, based on a sample of 67 companies, reveals a highly efficient and robust payment culture. The data indicates that the sector is characterised by rapid settlement periods, significantly outperforming standard UK payment benchmarks. The central tendency metrics are particularly encouraging for suppliers and creditors; the average payment time stands at 20.2 days, whilst the median payment time is even tighter at 18 days. This disparity between the mean and median suggests that the dataset is not heavily skewed by extreme delinquencies, a conclusion further supported by a standard deviation of 10.6 days. Such figures demonstrate that companies within this sector realise the importance of liquidity and maintain rigorous internal controls to ensure obligations are met promptly.

When we organise the data by distribution tiers, the sector’s commitment to prompt payment becomes even more apparent. An overwhelming majority of the companies analysed—59 out of 67, or 88.1%—fall within the 'Fast' category (0-30 days). Consequently, the risk profile for this sector is exceptionally low. By comparison, the 'Moderate' band (31-45 days) accounts for only 10.4% of the sample, whilst the 'Slow' category (46-60 days) is entirely empty. It is notable that amongst the entire cohort, only a single company (1.5%) fell into the 'Very Slow' bracket (61-90 days), and there were zero instances of critical non-payment extending beyond 90 days. This distribution heavily favours suppliers, ensuring stable cash flow and reducing the administrative burden of credit control.

A closer look at the quartile analysis reinforces the consistency of this behaviour. The interquartile range is remarkably narrow at just 11 days, spanning from a 25th percentile of 14 days to a 75th percentile of 25 days. This indicates that payment speeds are not merely an average metric but are standard practice across the board. Furthermore, with 38 companies classified as top performers (paying in under 20 days), and the fastest payer settling accounts in just 3 days, the sector sets a high benchmark. However, it is worth noting that despite the speed, 14.1% of payments were technically classified as 'late'. Given that 83.7% of invoices are paid within 30 days, this 'lateness' likely stems from aggressive agreed terms (e.g., 7 or 14 days) rather than genuine distress, though it is a nuance that credit managers should monitor.

Geographically, the sample displays a distinct concentration of activity. The sector is heavily London-centric, with 52 of the 67 companies (77.6%) located in the capital. The remaining entities are sparsely distributed amongst the South East, East of Scotland, West Midlands, and Yorkshire and The Humber. This geographic clustering suggests that the prevailing payment culture may be influenced by the competitive, fast-paced business environment typical of the London market. In summary, the Banking sector presents a low-risk profile with a strong tendency towards early settlement, making it a highly favourable environment for trade credit.