Late payments, and their impact, have been showing up in far-flung corners of the globe. To that end, last week, the Irish SME Association (ISME) said its quarterly Credit Watch Survey found that payment terms are worsening for smaller firms in that country. Business World noted that the overall terms have slipped from 52 to 55 days, as measured in what are known as credit days. Overall, 67 percent of firms are experiencing delays that can stretch beyond two months.
The survey also found that, in terms of verticals, the manufacturing and construction industries are seeing the biggest impact, at a respective 63 days and 69 days. The pinch of late payments has been such that 71 percent of small and medium-sized enterprises (SMEs) would embrace a mandated 30-day payment regime, said the findings.
In the report, ISME CEO Neil McDonnell said, “Cash flow certainty is essential for sustainable businesses. Failure by businesses to pay each other on time has a knock-on effect on productivity, development and growth. There needs to be a change in our attitude when it comes to paying creditors. Today’s results paint a negative image for big business when paying SMEs. Forty-one percent are taking longer to pay, which is unacceptable. Few small businesses have the same working capital buffers that big businesses enjoy, and can’t wait to get paid.”
The Impact Down Under And Beyond
The picture for SMEs down under is also a bit pressured, as data released in the newest SV Partners Commercial Risk Outlook Report that debuted this month showed roughly 9,900 firms are “on the brink of collapse,” as stated by SmartCompany, and where “experts say business strength is unlikely to improve.” These are firms that have less than $50 million in annual turnover on the top line, and the insolvency could come in as little as 12 months.
Separately, as stated by the Economic Times, it has been reported that Coal India is tightening its credit policy and will penalize firms that are delaying payments beyond 15 days. The firm will also stop supply if payments are delayed beyond a month, all in an effort to bring down its payables.
In The U.K.
It seems like no discussion of late payments is complete without a nod to the United Kingdom. Yet another report, known as the “Changing trends in the purchasing processes of U.K. businesses” report, commissioned by accounts payable solutions provider Invu, shows the pressure that faces smaller firms, long-documented in this space. In the latest set of numbers from the firm, Invu stated that roughly 60 percent of firms within the U.K. are finding it difficult to pay suppliers on time. As many as one in five have found the struggle to be “a significant problem.”
Breaking down the data, Invu noted that it is larger firms with the greater difficulties in meeting payment terms. Of those larger companies, 64 percent of finance “decision-makers” have stated that timely payments are a problem, compared to 57 percent of companies that fall into the medium-sized brackets.
The numbers follow the data that bowed from Hitachi Capital Business Finance, which said that, in the U.K., as many as 63 percent of firms must grapple with late payments. In this case, the smaller subset of firms are having difficulty. Only 30 percent of smaller firms said they have seen all of their invoices being paid on time. Breaking the numbers down a bit, as many as 48 percent of those surveyed said they had seen invoices paid a week late. Another 46 percent said invoices had been paid a month late.