Late payments in food supply chain continue to rise

Cashflow concerns are mounting for businesses in the food supply chain, with late payments adding further woes.

Data from credit insurance firm Atradius found that the number of claims it received in the food sector for late and failed payments was up by 80% last year.

Businesses have faced a “quadruple threat” of rising prices, Brexit implications, Covid-19 and adverse weather, according to the firm.

See also: Dwindling farmer confidence will dent food production, NFU warns

Atradius senior underwriter Georgios Panzaris said: “This follows a relatively subdued period in 2021, when businesses could benefit from ongoing government support put in place during the pandemic.

“However, with no such support in place this year, firms will be bracing themselves for the coming months.

“Companies that have traditionally operated on thin margins will be particularly vulnerable to volatile market conditions, but even the biggest players are being tested.

“With insolvency a real risk, businesses need to do all they can to ensure they are protecting cashflow so they can mitigate the risk of a large customer failing unexpectedly.”

Prices of food and non-alcoholic drinks have risen at the fastest rate for more than 45 years in the 12 months to March 2023, according to the Office for National Statistics, with the annual inflation rate at 19.2%.

The Environment, Food and Rural Affairs committee has launched an investigation into fairness in the food supply chain to determine how profitability and risks are shared.

Evidence can be submitted on the government website until 29 July.