Lighting

Payment Behaviour Analysis: Lighting Sector

An in-depth analysis of payment behaviour within the Lighting sector reveals a financial landscape characterised by significant volatility and extended settlement terms. Based on a sample of 21 companies, the data indicates that the sector does not generally favour rapid settlement. The average payment time stands at 48.8 days, whilst the median is slightly lower at 45 days. This discrepancy, alongside a substantial standard deviation of 20 days, points to a distinct lack of standardisation in payment processes across the industry. Such figures suggest that whilst some entities manage their cash flow efficiently, a considerable portion of the sector struggles to organise timely remittances, effectively shifting the financial burden onto their suppliers. The centre of the data suggests that a payment term of roughly a month and a half is the established norm, yet the high variance warns against relying on this average for cash forecasting.

Examining the distribution further highlights this fragmentation. Amongst the analysed companies, there is a clear polarisation in performance: whilst 23.8% of firms are categorised as fast payers (settling within 30 days), an identical proportion (23.8%) fall into the 'very slow' category, taking between 61 and 90 days to settle invoices. The interquartile range of 30 days—spanning from a 25th percentile of 36 days to a 75th percentile of 66 days—reinforces the unpredictability suppliers face. This broad variance suggests that credit control teams must remain vigilant, as there is no guarantee of consistent payment behaviour. Suppliers must realise that dealing with the upper quartile of this sector entails waiting over two months for payment, a delay that can severely impact working capital cycles.

Performance metrics indicate that late payments remain a pressing concern for stakeholders in the Lighting sector. Only 34.6% of invoices are paid within the standard 30-day window, whereas a significant 26% of payments drag on for over 60 days. More critically, 22.1% of all payments are classified as late, a figure that businesses must acknowledge as a tangible risk. The extremes of the dataset illustrate this disparity vividly; whilst the fastest payer settles in a mere 7 days, the slowest extends to 91 days. This single critical outlier (>90 days) represents 4.8% of the sample. Although this percentage appears low, in a high-value transaction environment, even a single non-payer in the 'critical' band can destabilise a supplier's ledger.

Geographically, the dataset is heavily skewed towards the South East (9 companies) and the West Midlands (5 companies), suggesting the sector's financial activities are largely concentrated in these commercial hubs. In conclusion, the Lighting sector displays a payment culture that tends towards the slower end of the spectrum. Suppliers engaging with this sector should favour robust credit terms and pro-active collection strategies. The analysis demonstrates that whilst moderate terms are common, the prevalence of payments extending beyond two months requires businesses to specialise in rigorous credit control to mitigate liquidity risks.