When it comes to invoice payments, speed thrills, like a fast-paced World Cup match. Thus, the Late Payments World Cup.
Creditsafe commissioned a study that ranked countries according to how quickly firms in each nation pay invoices.
As noted in SmallBusiness.co.uk, Brazil came in first, with payments days beyond terms (DBT) at 4.3 days, followed by Iceland at 6.4 days. (The DBT is a reflection of days past the official due date.) The top 16 is rounded out by Colombia at 8.9 days. Much beleaguered England comes in at 16 days, but ahead of the last place position taken by Portugal, at the back of the pack at 19.4 days.
Said Cato Syversen, CEO of Creditsafe: “It’s interesting to see that not only [is] Brazil on top of their sporting game, they are also on top when it comes to paying their suppliers. With England, I’m sure some would argue that reaching the last 16 in the Late Payments tournament is a fair reflection of how the team is expected to perform on the pitch.
“However,” the CEO continued, “it also indicates that there is much more that English businesses should be doing to ensure they are paying their suppliers on time. The Late Payments World Cup highlights that a late payments culture exists around the world, and England’s mid-ranking performance suggests there is more that can be learnt from countries far and wide.’”
Given England’s results in the survey, and amid continuing woes in the construction industry (and beyond), it may not be a surprise that subcontractors write off as much as 2.8 billion pounds in bad debts every year as the field grapples with late payments.
That number comes via a study by Bibby Financial Services specialist/consultant Vinden Partnership, conducted through Subcontracting Growth 2018 research. That study, of course, reflects the ripple effect of Carillion’s demise, and states that 60 percent of subcontractors have been impacted by bad debt in the last 12 months.
Taken as an average, the firms write off more than 16 thousand pounds annually. And in some illumination in the survey, roughly 17 percent of subcontractors have not received the full amount of monies due because a customer has gone out of business.
The findings noted above echo research from Liberis, which shows that aged debt hurts the retail sector, where retailers state they are owed, on average, about 20,000 pounds in late payments. And as many as 61 percent of retailers state that their debt levels have kept them from plowing money back into their firms. The data also shows that 62 percent of small retailers with an average top line of 2.5 million pounds are most severely hit by aged debt.
In Canada, news came this week that the provincial government will debut new legislation that will protect contractors and construction firms from late payments tied to invoices still yet to be paid.
Thus, two provinces, Ontario and Saskatchewan, will have brought new rules and procedures on a large scale to late payments. The new mandates will serve as amendments to the Builders Lien Act, dictating prompt payment and adjudication provisions, as reported in the Saskatoon StarPhoenix. The payment terms will be 30 days, and would mollify the average payment turnaround of 70 days. The legislation would also feature a binding process for subcontractors can get money from clients.