Parts and Components

Sector Payment Analysis: Parts and components

We have analysed the payment behaviour of 55 companies within the Parts and components sector to evaluate financial stability and cash flow efficiency. The data reveals a payment culture that leans significantly towards moderate-to-slow settlement terms. The sector demonstrates an average payment time of 49.1 days, with the median sitting slightly lower at 46 days. This proximity between the mean and median suggests a relatively balanced distribution without severe skewing, although the standard deviation of 16.6 days indicates that payment variability is still a factor that suppliers must manage. It is evident that this industry does not favour rapid settlement; only a single company, representing the top performer, managed to settle accounts in under 20 days (19 days).

The distribution analysis further clarifies the sector's operational tempo. Whilst a small minority of companies (10.9%) organise their payments within a prompt 30-day window, the vast majority fall into the moderate or slow categories. Specifically, 38.2% of the analysed entities pay between 31 and 45 days, representing the most common payment window. Concerningly, a combined 51% of companies take between 46 and 90 days to settle invoices. The interquartile range reflects this sluggishness, spanning from 35 days (25th percentile) to 61 days (75th percentile). This indicates that suppliers must realise that a two-month wait for payment is standard practice for a significant portion of this market.

Despite the tendency towards slower payments, the risk profile regarding critical delinquency is surprisingly low. Amongst the 55 companies reviewed, zero were categorised as critical payers (90+ days), with the slowest payer recorded at 84 days. This suggests that whilst companies in this sector preserve their working capital by delaying payment, they stop short of extreme default. However, performance metrics indicate that 31.6% of payments are classified as late, which signals a potential strain on supply chain relationships. The disparity between the low number of "fast" companies (10.9%) and the higher metric of invoices paid within 30 days (33.3%) suggests that whilst companies generally average slower times, they may prioritise specific smaller vendors or critical invoices for quicker settlement.

Geographically, the dataset is heavily centred in the Midlands, with the West and East Midlands accounting for 23 of the 55 companies (nearly 42%). This regional concentration suggests that the payment practices observed may be influenced by the specific industrial or commercial ecosystem of that area. In summary, businesses engaging with this sector should anticipate a cash conversion cycle averaging roughly seven weeks. To mitigate risk, stakeholders should distinguish between the reliable, albeit slow, payers and those drifting towards the 80-day mark, as the sector clearly specialises in extended credit terms rather than immediate liquidity.