Sector’s payment terms reflective of national average

Q3 data from Red Flag Alert shows a temperamental financial outlook for the UK’s hospitality sector.

An analysis of the extent to which companies are stretching payments to suppliers beyond contractual terms shows that hotels and other accommodation providers are still reporting an average payment term of 15 days beyond terms, similar to the same time last year.

Reflective of the wider national average, the result does show an improvement from 16 days beyond terms in Q2 of this year, however data still indicates there are significant payment pressure points within the industry.

The Red Flag Alert data is a barometer of the health of corporate UK. Its late payments research follows on from distress analysis earlier this quarter, which showed a decline in UK businesses facing critical distress but a rise in those facing significant problems.

Partner at Red Flag Alert Mark Halstead said: “These figures show that hotels, guest houses and B&Bs have all been facing continued pressure since 2012, although payment pain points appear to have improved somewhat in the last quarter.

“As the backbone of the UK economy, this situation should be a priority for Government and of equal concern to large corporates who may find themselves without small but potentially crucial suppliers,” he added.