Clothes

Payment Behaviour Analysis: Clothes Sector

This report outlines a detailed analysis of payment practices within the Clothes sector, drawing upon a sample size of 126 companies. To accurateley assess the financial health of the sector, it is crucial to recognise that the raw arithmetic mean of 34,353.5 days is heavily distorted by a statistically extreme anomaly—specifically, a single data point exceeding 4 million days, likely representing a liquidation or data error. Consequently, a senior analyst must look beyond the average and focus on the median and quartile values to realise the true payment culture. The median payment time stands at 40 days, which serves as the most reliable indicator of typical behaviour within the sector. This suggests that whilst outliers skew the aggregate data, the standard operating procedure for the majority of firms is to settle invoices just beyond the traditional 30-day window.

When we analyse the distribution of payment speeds, we observe a clear stratification of credit terms. The data indicates that payment behaviour is moderately efficient but certainly not immediate. Amongst the 126 companies sampled, 34.1% (43 companies) are classified as 'Fast', settling debts within 30 days. However, a significant cohort falls into the 'Moderate' category (30.2%), paying between 31 and 45 days. When combined, these figures reveal that roughly two-thirds of the sector organise their cash flow to ensure suppliers are paid within a month and a half. The interquartile range confirms this structural norm, with the middle 50% of companies paying between 28 and 52 days. This tight clustering suggests a sector that generally favours standard commercial terms, though it often stretches them to the upper limit of acceptability.

Despite the stability at the centre of the distribution, there is a concerning 'long tail' of late settlements that warrants scrutiny. Approximately 20.3% of payments extend beyond 60 days, and the dataset highlights that 32.3% of all payments are classified as late against agreed terms. More critically, whilst 8 companies specialise in rapid settlement (under 20 days), there remains a stubborn minority of critical cases. The 2.4% of companies taking 90+ days to pay represent a significant credit risk to the supply chain. It is vital to realise that whilst the median is stable, the standard deviation of 383,623.4 days—driven by the aforementioned extreme outlier—serves as a stark reminder of the volatility that can exist at the fringes of the dataset.

Finally, the geographic profile of the sector is heavily weighted towards the capital. The analysis reveals that the industry is largely London-centric, with 52 companies (nearly 41% of the sample) based in the capital, followed by an even split between the North West and West Midlands (15 companies each). This regional concentration may influence payment culture, as London-based entities often operate with different liquidity pressures compared to regional counterparts. In summary, whilst the Clothes sector displays a median payment time of 40 days that appears manageable, suppliers should remain vigilant regarding the 32.3% probability of late payment and the significant minority of firms that delay settlement beyond two months.