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The effect of the pandemic on supplier payment times

2 March 2022

Illustration of an invoice on a laptop

With businesses facing new challenges and risks, has the pandemic had an effect on supplier payment times? In our latest post, Anthony Flynn explores the impact the pandemic has had on invoice payments.

Between lockdowns, product shortages and staff absenteeism, the COVID-19 pandemic caused major disruption to business activity. Within the supply chain field, the assumption was that the pandemic would stop suppliers getting paid on time or even getting paid at all [1]. The situation for all trade creditors was seen as precarious and small suppliers were identified as especially vulnerable.

The emerging data showed warning clouds on the horizon. Non-financial firms in the US were slowing payments to suppliers to increase their cash-on-hand [2] while contractors were expressing nervousness in surveys over when they would receive payment for services rendered [3].

Assumptions about payment delays were driven by the experience of the 2008 international banking crisis. The resulting recession led firms to extend their supplier payment times by, on average, 10 days in the US and 7 days in Europe [1]. While it may not seem like much on paper, payment delays of this order deprive firms of funds for current expenditure and capital investment and can trigger a chain reaction of overdue payments across industry.

Why does this change in payment behaviour happen? In times of economic uncertainty, firms want to conserve cash and strengthen their balance sheet. Their risk aversion grows, and a self-preservation mindset takes over until normal trading conditions return. Suppliers typically bear the brunt of this financial retrenchment and must contend with waiting longer to get paid.

Returning to the pandemic and supplier payment practices – did it make things worse, as expected? The answer, surprisingly, is no. Analysis that I carried out on the supplier payment practices of thousands of large UK-based firms reveals that there was very little change in the time taken by buyers to settle their invoices with suppliers between the start of 2018 and the end of 2021. There has even been marginal improvement in payment practice indicators over the course of the pandemic.

In the pre-pandemic years of 2018 and 2019, UK firms were averaging 37 days to pay their suppliers. This figure remained constant throughout the pandemic years of 2020 and 2021. Before the pandemic, firms were settling approximately 54% of their invoices within the standard 30-day window. During the pandemic this figure improved to 56%. It is noteworthy too that the percentage of invoices paid according to the agreed terms rose during the pandemic, going from 69% in 2018 to 73.5% in 2021. The latter was achieved without firms adjusting their standard payment times.

How can we account for these results? Part of the answer lies in the unprecedented financial support that the UK government provided to businesses. An estimated £150B was made available in the form of recovery loans, grants, VAT deferrals, rates relief and job retention schemes [4]. This helped firms to remain liquid and discharge their financial obligations to creditors. Government support of this size was not forthcoming during the 2008 financial crisis, and the ensuring liquidity crunch on firms was one of the reasons why suppliers struggled to receive payment.

The pandemic also brought about a shift in the balance of power between buyers and suppliers. Overseas production bottlenecks and logistics constraints has meant that buyers find themselves competing with one another to secure scarce supplies. Under these conditions, timely payment to suppliers is advisable to keep them onside. There has also been goodwill shown by firms to their suppliers and commercial partners. Nationwide UK, Sainsbury’s and M&S are among the high street firms that accelerated payment to small suppliers to get them through the pandemic [5].

The COVID-19 pandemic has upended received wisdom about the workings of the economy. Into the mix we can add that it has confounded expectations about financial transactions between buyers and suppliers. There was reason to believe that it would lengthen payment times and increase non-compliance with agreed terms, but this proved not to be the case, at least not in a UK context. Every economic and supply chain crisis is different, so we need to be careful about extrapolating from past experiences to predict the future.

Anthony Flynn is a Senior Lecturer in Purchasing and Supply Management. He has a particular research interest in SME participation in public sector supply chains.



  1. Caniato, F., Moretto, A., Rice Jr., J.B. (2020), “A financial crisis is looming for smaller suppliers”, Harvard Business Review, Vol. 56, No. August 06. Available at:
  2. Hackett Group. (2020), Pandemic drives significant changes in working capital performance in 2020, July 15. Available at:
  3. Melnyk, S.A., Schoenherr, T., Verter, V., Evans, C. and Shanley, C. (2021), “The pandemic and SME supply chains: Learning from early experiences of SME suppliers in the US defense industry”, Journal of Purchasing and Supply Management, Vol. 27, No. 4, pp.1007-14.
  4. Brien, P. and Keep, M. (2021), Public spending during the Covid-19 pandemic. House of Commons Library, pp.1-25. Available at:
  5. Faulkner, L. (2021), How Nationwide supported SMEs during the pandemic. Available at: