Oil and Gas

Sector Payment Analysis: Oil and gas

As a senior business analyst specialising in UK payment practices, I have conducted a thorough review of the Oil and gas sector, utilising a dataset of 162 companies. The primary objective was to analyse the financial health and settlement culture within this specific industry vertical. Upon reviewing the central tendency metrics, the sector demonstrates a generally disciplined payment behaviour. The data reveals that payment practices centre around a median time of 30 days, which aligns closely with the arithmetic mean of 31.1 days. This proximity between the mean and median suggests that the dataset is not heavily skewed by extreme values, though the standard deviation of 16.2 days indicates that a degree of variability exists amongst the broader sample. Consequently, whilst the average company adheres to standard commercial terms, suppliers should realise that consistency can fluctuate depending on the specific counterparty.

A detailed examination of the distribution analysis highlights that the Oil and gas sector largely favours prompt settlement. A significant majority—comprising 91 companies or 56.2% of the sample—fall within the 'Fast' category, settling their obligations between 0 and 30 days. Furthermore, the interquartile range (IQR) of 16 days indicates that the middle 50% of organisations pay between 21 and 37 days. This clustering suggests a stable operating environment where cash flow is relatively predictable for the supply chain. However, it is crucial to note that whilst over half the sector pays promptly, nearly a third (32.7%) fall into the 'Moderate' band of 31 to 45 days. This suggests that stretching payments slightly beyond the traditional 30-day term is a common cash management strategy amongst a significant minority of firms in this space.

Despite the prevailing trend of promptness, credit risk professionals must organise their ledgers with caution regarding the outliers. The data identifies a 'Critical' segment where 1.9% of companies take over 90 days to pay, with the slowest payer recorded at a concerning 112 days. This contrasts sharply with the sector's top performers, where 36 companies settle invoices in under 20 days, and the fastest payer settles in just 4 days. The disparity highlights that, although the aggregate behaviour is sound, exposure to specific poor performers could severely impact a supplier's working capital. Furthermore, with 18.1% of payments classified as 'late', it is evident that administrative delays or liquidity constraints still affect nearly one in five transactions.

Geographically, the sector's financial activity is heavily concentrated in the South of England, with London (68 companies) and the South East (35 companies) accounting for the majority of the dataset. However, the presence of 14 companies in Aberdeen is statistically significant, likely indicating a sub-cluster related to energy or industrial specialised services often associated with that region. In summary, whilst the Oil and gas sector generally maintains a robust payment morality with 70.3% of performance paid within 30 days, stakeholders must remain vigilant regarding the minority of entities that exhibit critical delays.