Manufacturing

Payment Behaviour Analysis: Manufacturing Sector

An in-depth analysis of the payment behaviour within the Manufacturing sector, comprising a sample size of 81 companies, reveals a payment culture that leans heavily towards extended settlement periods. The data indicates a mean payment time of 49.6 days, closely tracking a median of 46 days. This alignment suggests that the central tendency is robust, yet the standard deviation of 19.1 days highlights a notable inconsistency in practices across the sector. Suppliers operating within this vertical must realise that standard terms are frequently stretched, necessitating robust cash flow forecasting to accommodate a cycle that averages nearly seven weeks.

When we analyse the distribution quartiles, a distinct polarisation becomes apparent. The interquartile range of 28 days demonstrates significant variability in how obligations are settled. Whilst 18.5% of the companies analysed demonstrate prompt behaviour (settling within 30 days), a concerning 28.4% fall into the 'Very Slow' category of 61-90 days. This creates a difficult landscape where a supplier is effectively just as likely to face a two-to-three-month wait as they are to be paid within a moderate 45-day window. The 75th percentile sits at 62 days, meaning that one in four companies in this sector will routinely delay payment beyond two months, placing significant pressure on the supply chain.

The risk profile of the Manufacturing sector is further compounded by the prevalence of late payments. Our data shows that 32.7% of all invoices are classified as late, a figure that signals potential liquidity strain for vendors. Furthermore, 28.5% of payments extend beyond the 60-day threshold. Although only one company fell into the critical 90+ day category (with the slowest payer clocking in at 95 days), the substantial clustering in the 61-90 day bracket suggests that delaying payments is a systemic strategy amongst nearly a third of the sector. Conversely, top performers are rare, with only two companies specialising in rapid settlement of under 20 days, the fastest being 15 days.

Geographically, the South East acts as the primary commercial centre for this sample (13 companies), followed closely by the East and West Midlands. For stakeholders trading with the Manufacturing sector, the data favours a highly cautious approach to credit management. The high volume of companies paying between 61 and 90 days indicates that credit control teams must remain vigilant. To minimise exposure, suppliers should prioritise early engagement and potentially incentivise faster settlement, recognising that whilst the fastest payer settles in two weeks, the sector average remains stubbornly high.