B2B Payments

Large Firms Take Late Payments Fight Into Their Own Hands

In the fight against late B2B payments, there is good news and bad news. The bad news is that new research shows late payments were on the rise during the height of the pandemic and coronavirus-related lockdowns, adding even more cash flow pressure on the smallest of businesses. But the good news, as this week's B2B Data Digest shows, is some larger enterprises are taking the initiative to address this burden.

16 event producers claim they are owed late payments from a Washington state-based box office company, recent reports in Beaumont Enterprise say. Seattle lawyers have filed a lawsuit on behalf of the event producers, which claim Brown Paper Tickets have not paid the producers in full for ticket proceeds linked to sales for events that were ultimately canceled as a result of the coronavirus. A lawsuit has also been filed on behalf of consumer ticket purchasers accusing the company of failing to provide refunds.

19 heads of trade across the globe's largest trade banks have published a set of payables financing best practices, according to the American Bankers Association. The heads of trade are a part of the BAFT, the ABA's global transaction banking subsidiary, and form the BAFT's Global Trade Industrial Council. In their set of principles, the experts say payables financing, which is a buyer-led program to help suppliers access financing by selling their receivables, can help ease the pain of longer payment terms by connecting vendors to capital more quickly (for a discount). The cost of financing is based off of buyer risk, which can also be more affordable when buyers are larger and have stronger credit histories. The Council published the principles in an effort to clarify best applications of payables financing programs for corporates and their banks.

54 percent of invoices sent by U.K. freelancers and small businesses are paid on time, warns a new report from FreeAgent, according to Herald Scotland. Analysts point to the coronavirus crisis as a key factor driving longer and late B2B payments in the country, with Scotland's B2B payment practices only slightly better with 52 percent of invoices paid on time. The survey assessed more than 2 million invoices sent between January 2019 and June 2020, and found that during the height of lockdown, the number of invoices paid on time to small and medium-sized businesses (SMBs) dropped by a third compared to other quarters. In a statement, FreeAgent Chief Executive and Co-Founder Ed Molyneux said, "it's vital that we do not brush the issue of late payments to one side."

60-day payment terms are the average for large U.S. companies to pay their suppliers, according to recent Wall Street Journal reports, citing Hackett Group research. The data, which applies to nonfinancial businesses in the second quarter of this year, marks a 10-year record high for payment terms. Yet there are some corporate giants actually accelerating their payments to vendors that might otherwise fail: reports cited Lockheed Martin and Micron Technology, for instance, as some of the latest names to accelerate their supplier payments by as much as half their usual payment terms. According to WSJ reports, Lockheed alone accelerated B2B payments totaling $1.3 billion to suppliers, prioritizing smaller vendors, the company said.

A $120,000 contract has been awarded to PwC to help enforce the Australian government's B2B payment time reporting legislation. According to The Australian, PwC, which has been a vocal advocate of supply chain financing — a controversial tool that opponents argue can actually reinforce late payments behavior — will help to enforce the bill that would name and shame large organizations that fail to pay their suppliers within 30 days. PwC will reportedly develop "guidance material" to help organizations comply with these prompt payment requirements. The legislation as it stands would apply to an estimated 3,000 large organizations within Australia. In a statement, Small Business Ombudsman Kate Carnell said she was "a little bit fascinated" as to why the government has sought help from PwC to enforce the bill.

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NEW PYMNTS STUDY: LEVERAGING THE DIGITAL BANKING SHIFT – SEPTEMBER 2020  

The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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