B2B Payments

How Many Businesses Struggle With Unpaid Invoices?

The issue of unpaid invoices and late payments is a hot topic in the U.K., especially amid efforts from policymakers to pass legislation in hopes of curbing the problem. But as it turns out, the U.K. is not the only region in which late B2B payments are an issue.

New research from Atradius published Wednesday (Sept. 23) reveals that one-third of businesses across the Americas — the U.S., Canada, Mexico and Brazil — are struggling to manage cash flow because they are stuck with invoices that are more than 90 days past due.

[bctt tweet=”One-third of businesses across the Americas are stuck with invoices more than 90 days past due”]

“As long outstanding receivables are highly likely to become bad debts and be written off, this may cause severe disruptions to cash flow,” Atradius said in its announcement.

The findings are outlined in the company’s “September 2015 Payment Practices Barometer.”

Analysts found even more troubling stats: 95 percent of B2B firms surveyed said they have experienced getting paid late by both domestic and foreign corporate buyers in the last year. According to researchers, these late payments account for about half of businesses’ AR funds, and the majority of it stems from foreign deals.

“The report highlights the need to understand the cash flow effect of dealing on credit, particularly in export markets,” said Atradius Trade Credit Insurance NAFTA Regional Director David Huey in a statement. “This means that a supplier may find their cash flow projections based on the home market average payment of 30 days is disrupted by a norm of 90 days elsewhere.”

U.S. firms, for example, saw more frequent late payments from foreign customers. Businesses in Mexico, however, experienced late payments from domestic corporate buyers more often than foreign ones.

Huey described the findings as “eye-opening.”

Atradius noted that 2.2 percent of B2B receivables value is written off because invoices go unpaid, meaning that debt goes uncollected. More than half of businesses surveyed said these uncollectable payments are most often due to corporate buyers going bankrupt or going out of business, but a significant portion of those surveyed said that it has been due to an inability to locate a customer or through an overall failure of payment collection attempts.

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