B2B Payments

Private Sector Not Immune To Late Payments Struggle

SMBs-Not-Immune-To-Late-Payments

Late payments know no boundaries, and can impact companies of all sizes, industries and geographies — whether in the private or public sector. This week, the late B2B payments struggle wages on in Scotland, Australia and the U.S.

In Scotland, analysis turns the spotlight on the construction industry, while new research from accounting company Xero points to the struggle that small businesses face when getting paid late. In the U.S., meanwhile, late payment problems hit both the private and public sectors. PYMNTS breaks down the data points from the latest late payments research and news stories below.

The latest analysis from cloud accounting firm Xero found that $80.86 billion worth of invoices remain outstanding every year for Australian small businesses. In a statement, Xero Managing Director Trent Innes described the figure as “staggering,” and one that “gives fresh urgency to solving the problem” of late payments. Xero’s report found 53 percent of all trade credit invoices are paid an average of 23 days past due. If they were paid on time, researchers said, it would transfer $4.9 billion worth of wealth from large corporates to small business suppliers.

Citing financial records, The Baltimore Sun reported last week that $2.1 million worth of unpaid invoices are stuck in the Baltimore Symphony Orchestra’s accounts receivable department. That debt is more than double what its outstanding supplier bills were 19 months ago. Today, 39.5 percent of the value of outstanding bills the orchestra owes is more than 60 days past due. Reports pointed to the organization’s “financial crisis and labor dispute” as spilling into its supplier payment practices. Reports this week also highlighted delayed payment practices within the Dallas Police Department, a story from WFAA that highlights the challenges late B2B payments pose for the public, as well as private sectors.

Twenty-eight percent of Scottish engineering and construction firms are paid by public organizations within 30 days, a figure reduced to 24 percent when corporate customers are in the private sector, according to a new Specialist Engineering Contractors’ (SEC) Group Scotland report. In response, trade body SELECT called the findings “genuinely shocking” and “an embarrassment for all concerned,” according to the body’s Managing Director Alan Wilson. The SEC Group Scotland has reportedly welcomed regulatory efforts to address late payments in the construction industry, Modern Building Services reports said last week. The group is also calling on policymakers to do more to embrace the Prompt Payment Code, and enforce 30-day payment terms.

Thirty-nine percent of suppliers using Taulia say their corporate customers pay late, according to a recent survey released by the accounts receivable solutions provider. According to Taulia Vice President of Supplier Success Bob Glotfelty, the significant portion of B2B vendors seeing their invoices paid late presents an opportunity for B2B relationships to embrace early payment discounts to incentivize on-time and early invoice payments.

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