Electronics Hardware

Analytical Summary of Payment Behaviour in the Electronics hardware Sector

This analysis evaluates the payment behaviour of 43 companies within the Electronics hardware sector to determine the prevailing credit risk profile. The data reveals a central tendency that leans towards moderate delays, characterised by a notable divergence between the mean and median figures. The average payment time stands at 41.3 days, whilst the median is significantly lower at 35 days. This discrepancy highlights a positive skew in the data, indicating that a minority of slower-paying companies are dragging the sector average upwards. Furthermore, the standard deviation of 24.2 days is substantial, suggesting that payment performance is highly inconsistent across the sample. Stakeholders must realise that relying on a uniform payment expectation is inadvisable given this high level of volatility.

When we analyse the distribution quartiles, we observe distinct tiers of performance. The sector does not overwhelmingly favour rapid settlement, yet 37.2% of companies do manage to pay within the 0–30 day 'Fast' bracket. The top performers are settling debts impressively quickly, with the fastest payer recorded at 14 days. However, the interquartile range of 26 days (from 25 to 51 days) suggests that for the middle 50% of the sector, suppliers should anticipate a waiting period of roughly one to two months. It is evident that whilst the top quartile operates with high efficiency, companies that specialise in managing their working capital aggressively are creating cash flow pressure for their suppliers, pushing the 75th percentile out to 51 days.

Of particular concern amongst the findings is the long tail of poor performance and the prevalence of late payments. The data indicates that 23% of the sample is flagged for late payments, and 17.4% of companies take over 60 days to settle invoices. More critically, the analysis identifies a high-risk group in the 'Very Slow' and 'Critical' categories, comprising 14% of the sector. The slowest payer requires 132 days to settle accounts—an extreme outlier that could cause severe liquidity issues for smaller vendors. Suppliers dealing with this sector must organise their credit control processes robustly, as the risk of encountering a partner with payment terms exceeding 90 days is non-trivial (7.0%).

Geographically, the centre of activity for this sample is heavily consolidated in the South East and London, which account for nearly half of the companies analysed. This regional bias may reflect the broader economic concentration of the Electronics hardware sector. In conclusion, whilst nearly half of the companies (48.3%) pay within 30 days, the presence of significant outliers and a high standard deviation necessitates a cautious approach. Credit managers should not assume the median performance applies to all; instead, they should analyse individual trading partners closely to mitigate the risks associated with the bottom quartile of performers.