Distribution and Wholesale

Payment Behaviour Analysis: Distribution and wholesale Sector

This report aims to analyse the prevailing payment culture within the Distribution and wholesale sector, drawing upon a dataset of 260 companies. The aggregate data reveals a highly consolidated central tendency, with an average payment time of 40.7 days and a median of 40 days. The proximity of the mean to the median suggests a relatively symmetrical distribution, indicating that a 40-day settlement period is the established norm for the industry. Whilst this provides a degree of predictability for creditors, the standard deviation of 14.6 days serves as a cautionary metric. It demonstrates that although the average is stable, there is significant variance amongst individual firms, meaning suppliers must remain vigilant regarding specific account behaviour rather than relying solely on sector averages.

When we organise the companies by payment speed distribution, it becomes apparent that the sector does not favour rapid liquidity. Only 67 companies (25.8%) maintain an average payment speed of 0–30 days. The majority of the sector is clustered in the 'Moderate' (31–45 days) and 'Slow' (46–60 days) categories, representing 38.8% and 27.7% of the sample, respectively. Interestingly, the performance breakdown highlights a nuance in the data: whilst only a quarter of companies average under 30 days, 42.7% of actual payments are cleared within this window. This discrepancy suggests that larger entities or those with higher transaction volumes may be processing payments faster than the distinct company averages would imply, or that companies generally prioritise smaller invoices for quicker settlement.

A critical review of the quartiles and outliers forces us to realise the potential cash flow risks inherent in this market. The interquartile range spans 21 days (from 30 to 51 days), creating a broad window of uncertainty for cash forecasting. Furthermore, with 31.7% of payments classified as late, credit control teams must specialise in proactive chasing strategies. The analysis identified extreme divergence in performance; the most efficient payer settles in just 4 days, whilst the slowest extends to 97 days. Amongst the sample, 20 companies (7.7%) fall into the 'Very Slow' or 'Critical' categories (exceeding 60 days). These outliers represent a severe credit risk, requiring stringent credit limits and perhaps pro-forma terms.

Finally, the geographical distribution places the centre of activity in London (41 companies), though there is a strong industrial footprint across the North West (31) and the Midlands (combining for 59 companies). Creditors operating in Distribution and wholesale should expect a baseline term of 40 days but must prepare for a significant minority of transactions drifting beyond 60 days. To mitigate risk, it is advisable to analyse individual debtor ledgers frequently and organise collections activity to prioritise the 27.7% of debtors sitting in the 46–60 day 'Slow' bracket, preventing them from slipping into the critical zone.