B2B Payments

Sour Notes Sounded In Late Payments?

Will it be a tidal wave of late payments?

In what is an example of late payments stretching into the digital realm — beyond the confines of what might be considered traditional B2B transactions — a familiar refrain may be heard in digital music.

Citing Norwegian newspaper Dagens NæringslivSpin reports that the music-streaming service owned by Jay-Z, Tidal, is “behind with payments directly to the three major international record companies,” (this, according to translation). Two sources told the Norwegian publication that payments have been late. One source on the record, Frithjof Hungnes, CEO of Norwegian independent record label Propellor Recordings, said they “have not been paid since October.” Another source, from Sony subsidiary Phonofile, which also operates in that country, said Tidal had been delaying payments.

Spin noted that Tidal has been boosting play counts for two albums (exclusive ones to Tidal) from 2016: Beyoncé’s “Lemonade” and Kanye West’s “The Life of Pablo.” The company has also reduced the percentage of revenues that are paid to record labels, from 62 percent to 55 percent.

Separately and also in Europe, Finnish eProcurement vendor, along with YouGov, released a survey that shows how very much in need new rules governing late payments are needed in the United Kingdom, especially among small to medium-sized enterprises (SMEs). The survey spanned 2,000 small businesses, defined as having fewer than 250 employees.

A significant tally of more than half of those surveyed said they support legislative movement. Six in 10 said they want to see a minimum payment term of 45 days. As many as 25 percent of firms said they have seen financial viability risked on the heels of late payments. This would translate to 665,000 of the roughly 2.6 million SMEs in the U.K. that have skirted the edge of bankruptcy. To keep afloat, more than half have used their own personal finances to keep operations in place.

Those findings seem to dovetail with research from Liberis, which provides small business financing, and which noted that 72 percent of SMEs spend three days monthly tracking down and trying to get late payments. The time spent chasing funding translates into £5,000 lost every year. Roughly a quarter of companies are chasing £20,000 of “aged debt.” Overall, according to the findings, there are 5.7 million SMEs in the U.K. that chase £14.9 billion in late payments. Roughly 40 percent of those surveyed said they do not have a clear-cut debt recovery process in place.

Echoed findings from Bacs: Late payments are costing SMEs £2 billion a year, with 25 percent of businesses facing late payments having to rely on bank overdrafts to keep operations humming.

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