SMBs Grapple With Late Payments Tug-Of-War

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With COVID-19 causing business closures and supply chain disruptions, cash flow remains tight for countless small and medium-sized businesses (SMBs) around the world. Unfortunately, those capital constraints are also often causing SMBs’ larger business customers to delay invoice payments. This week’s Data Digest looks into the tug-of-war emerging as regulators and large corporates push to accelerate B2B payments, while data reveals worsening payment delays.

5-day payment terms will be the B2B payment policy for Tesco Ireland through the end of February 2022, the grocery conglomerate announced recently. Tesco Ireland had previously implemented the accelerate invoice payment policy in response to the ongoing cash flow challenges in its supply chain due to the coronavirus crisis. Typically, the company said, it pays its more than 200 small suppliers within 14 days, but to strengthen the financial wellbeing of those vendors it will now pay invoices within five days.

30-day payment terms will be required among larger firms in the U.K. as the government looks to strengthen its current, voluntary Prompt Payment Code. According to Financial Times reports, the government is working to establish a requirement for corporates to pay 95 percent of their invoices submitted from small suppliers within 30 days. The new requisites will be in effect as of July 1. Currently, the Prompt Payment Code requires larger companies to pay invoices within 60 days, which will still be the policy for invoices submitted from vendors with more than 50 employees. While about 3,000 corporates have signed up for the voluntary code, complaints of late payments to small suppliers remain commonplace.

47 percent of invoices throughout Western Europe are past-due, according to a recent article penned by global trade credit insurance provider Atradius for a report in Supply Chain Brain. The company noted that more businesses facing late payments are turning to a range of financing methods to fill in their cash flow gaps, with companies using trade credit insurance, as well as financing from banks and other sources. More than one-third of Western Europe businesses surveyed said the collection of past-due invoices remains a worry.

90 days past-due is the average timespan Australia’s trucking industry waits to receive payment on invoices, a 500 percent increase from the previous late payment average of 15 days past-due, according to CreditorWatch data cited by OwnerDriver reports. The publication cited the statistics, which compared late payments in the industry between August 2019 and August 2020, to highlight the growing concerns trucking companies have over cash flow. According to Harley Dale, chief economist at CreditorWatch, there is a “mountain of trouble behind the curtain of stability.”

90.6 percent of small-value vendor invoices were paid within 20 days by the Australian government, new data from the Department of Industry, Science, Energy and Resources recently said. Reports in The Mandarin said the findings reflect an improvement of federal government invoice payment behavior for 2019-2020, with the report examining how the government paid invoices below $1 million during the period. Previous research found that only 61.7 percent of low-value invoices were paid within 20 days.

1,100 suppliers will be paid within 5 days by the Bank of Ireland, the financial institution announced recently, noting that it will continue to accelerate B2B payment times for small suppliers through the end of 2021. Typically, the bank said it pays its invoices within 30 days. Between April and December last year, the Bank of Ireland noted it paid more than $425 million worth of supplier invoices in an effort to support the cash flow of its vendors, RTE reports said.

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