Electricity Generation

Payment Behaviour Analysis: Electricity generation Sector

An extensive review of the Electricity generation sector reveals a highly favourable payment culture, characterised by prompt settlement practices and a high degree of financial discipline. In our sample of 11 companies, the data indicates that the sector is predominantly healthy, with a central tendency that favours suppliers and creditors. The average payment time stands at 27.6 days, closely aligned with the median payment time of 25 days. This proximity between the mean and the median suggests a relatively normal distribution of data, free from the extreme skewing often seen in more volatile industries. Consequently, suppliers trading within this sector can generally anticipate the realisation of funds within a standard 30-day term.

When we analyse the distribution of payment speeds, it becomes evident that promptness is the norm rather than the exception. A significant majority—9 out of the 11 companies analysed, representing 81.8% of the sample—settle their debts within the ‘Fast’ bracket of 0-30 days. This creates a stable environment for cash flow forecasting. However, whilst the general trend is positive, there are disparities amongst the sample group. The interquartile range of 12 days (spanning from 16 to 28 days) indicates a tight clustering of high performers. Yet, the presence of one company in the ‘Very Slow’ category (61-90 days), with a recorded payment time of 67 days, serves as a cautionary note. This outlier contributes to the standard deviation of 13.7 days, demonstrating that whilst the sector is reliable, due diligence remains essential to identify the minority of slower payers.

A granular examination of the performance breakdown further illuminates the payment behaviour within the Electricity generation sector. Notably, 76.1% of all invoices are paid within 30 days, which reinforces the sector’s strong credit standing. Nevertheless, it is crucial to recognise that 21.3% of payments are classified as late. This figure, whilst not alarming, suggests that administrative bottlenecks or specific working capital strategies may delay a fifth of transactions beyond their agreed terms. The disparity between the fastest payer (15 days) and the slowest payer (67 days) highlights the operational gap between the most agile organisations and those facing liquidity or process challenges. Stakeholders should realise that whilst the probability of prompt payment is high, the risk of delays is not entirely mitigated.

Geographically, the sample is heavily centred around the southern regions of the UK, with London accounting for nearly half of the analysed companies (5 entities), followed by the South West and South East. This regional concentration may influence the payment culture, reflecting the liquidity and business practices common to the capital and its surrounding hubs. In summary, the Electricity generation sector presents a low-risk profile for credit insurers and suppliers. The prevailing behaviour demonstrates a commitment to prompt payment, yet the existence of a 'slow tail'—albeit small—warrants a degree of scrutiny when extending significant credit to new partners within this space.