Fish merchants pay in days and get paid in months: put a price on the gap

Oct 27

5 min read

Updated: Oct 28

The fish is paid for within the week. The customer pays in fifty days. Between those two dates the merchant is, in effect, a lender, financing about six weeks of trade all year round. On £10 million of annual purchases that is well over £1 million of cash sitting in customers' bank accounts rather than the merchant's (illustrative round numbers).

Bank Rate was held at 3.75% at the Bank of England's September 2026 decision, and business overdrafts are priced some way above it. So the gap has a running cost. It also grows fastest at exactly the moment trade is best. That is the quiet irony of the trade.

The gap is set by payment terms, not by the auction

The cycle is simple. Fish is bought at the market or on the quay and paid for within days. It is sold to processors, wholesalers, caterers and retailers, who pay on thirty, sixty or more days. The margin is made in the buying and selling. The cash position is decided elsewhere, by the difference between the two sets of terms.

Late payment stretches the gap further. Research for the Department for Business and Trade, published in July 2025, put the cost of late payment to the UK economy at about £11 billion a year. Businesses reported that between 11% and 17% of their outstanding invoices were overdue, depending on size. Around £26 billion was owed to UK businesses at any one time. For a merchant, every invoice paid a fortnight late is another fortnight of fish already paid for twice over. Once at the market, and again in the overdraft interest.

A good run of landings drains cash before it shows a profit

The annual figures look steady. The MMO's UK sea fisheries statistics show UK vessels landed 745,000 tonnes worth £1.16 billion in 2024. That was up 4% by volume and 5% by value on 2023. Underneath, the landings come in lumps. In 2024, 80% of the herring landed into the UK by the UK fleet came in August and September. Around 95% of mackerel landings fell in January, February, October and November. Nephrops and lobster peak in summer; king scallops peak just before Christmas.

When a good fortnight arrives, the merchant buys more and pays out within days. The money for that fish does not come back for weeks. Take an illustrative merchant buying £200,000 a week. Two strong weeks at £350,000 each put an extra £300,000 into debtors before a penny of it is collected. A profitable business can hit its overdraft limit in the middle of its best month. It is an awkward reward for a good season.

Profit is decided at the auction. Cash is decided by the payment terms.

Five lines show how much cash the trade is holding

The calculation fits on the back of an invoice. Use the last twelve months from the accounts.

Days to pay suppliers: trade creditors divided by annual purchases, times 365.
Days in stock: average stock value divided by annual cost of sales, times 365. For fresh fish this is short; for frozen and smoked lines it is not.
Days to be paid: trade debtors divided by annual sales, times 365.
Cash cycle: days to be paid, plus days in stock, minus days to pay suppliers.
Cash tied up: cash cycle multiplied by an average day's purchases.

A worked example, with round numbers that are illustrative only. Purchases of £10 million a year are about £27,400 a day. Suppliers are paid in 7 days. Stock sits for 3 days. Customers pay in 52 days. The cash cycle is 48 days, and the cash tied up is about £1.3 million. At an illustrative 8% cost of borrowing, that costs around £105,000 a year in interest. Each day taken off the cycle releases about £27,000 for good.

Customer terms and credit control move more than supplier terms

Terms at a fish market rarely move much, and pushing them risks the supply. The customer side is a different matter. Terms for new accounts can often be set shorter than for old ones. Many merchants have never asked existing customers to move.

The law is also shifting. In March 2026 the government announced plans to cap the payment terms large firms can impose on smaller suppliers at 60 days. It also plans to require commercial contracts to carry late-payment interest at 8% above base rate. The detail and start dates depend on legislation, so check the current position before relying on it. The right to claim statutory interest and fixed compensation on late commercial debts is not new. It already exists under the Late Payment of Commercial Debts (Interest) Act 1998. Few small merchants use it. It is worth knowing it is there.

Credit control is where most of the easy days are found. Invoices raised a day or two after the wagon leaves, rather than the same day, add days nobody chose. So do weight, temperature and quality claims left sitting for weeks, because a customer will hold the whole invoice while one line is disputed. Stock days can come down too, by buying closer to confirmed orders. That matters most for frozen, smoked and prepared lines, which sit longer.

Set the limit for the good weeks before they come

Better terms will not stop the landings swinging. The business needs a rule for the good weeks. I would start with a thirteen-week cash forecast, updated every Monday. It should show what is landing, what is owed to suppliers, and what customers are due to pay. From that, set a ceiling on how much can be bought in any one week without breaching the overdraft. Agree any extra facility, such as a seasonal overdraft increase or invoice finance, before the herring or mackerel season starts. Not halfway through it. A bank lends more readily against a forecast than against a crisis.

What to do first

Work out the five lines above from last year's accounts, and again for your three busiest months.
List your ten largest customers by balance owed, with their agreed terms and the days they actually take to pay.
Raise every invoice the day the fish leaves the yard, and clear any open quality or weight claim within seven days.
Ask for shorter terms on all new accounts, and review whether late-payment interest belongs in your standard terms.
Build a weekly cash forecast and set a buying ceiling for strong weeks before the next peak season.

Sources

Figures are taken from the sources listed and were correct at the time of writing. Where rules are described, check the latest official guidance and take qualified advice before acting.