B2B Payments

Late Payments Cause Cash Flow Pain From UK To India

Among other strategies, the U.K. has enlisted a name-and-shame approach to late-paying corporates. Yet analysts agree that the late B2B payments problem continues to worsen.

According to recent reports by U.K. publication The Times, small to medium-sized businesses (SMBs) face an extra hurdle when chasing down late payments: collection efforts can damage the buyer-supplier relationship.

“Any freelancer I know who has charged interest on an invoice has not been hired again,” said freelance games writer Jupiter Hadley. “You don’t want to come across as difficult.”

The Association of Independent Professionals and the Self-Employed (IPSE) Policy Development Manager Alasdair Hutchison warned, meanwhile, that micro businesses are particularly susceptible to “supply chain bullying” in the form of delayed and late payments because SMBs “don’t have the same legal and administrative support that even a small or medium-sized enterprise might have, so they find it hard to enforce their rights.”

Below, PYMNTS unloads the latest statistics from the fight against late payments in the U.K. and beyond, plus explores some businesses most recently accused of paying their suppliers and business partners late.

45 days past due is the threshold for SMBs in India seeking clarity on large corporate and government payments. Outlook India recently reported that SMBs in the country are seeking a government initiative to require government departments and large firms to disclose details behind all invoices that are 45 days past due, with community social media platform LocalCircles leading the charge in an effort to improve local SMBs’ cash flow.

50 percent of SMB invoices were paid past their due date in 2019, new Xero analysis revealed. Reports in The Times found that Xero’s survey of 500 U.K. SMB owners are struggling with cash flow, with more than three-quarters acknowledging that if cash flow weren’t such an issue, running their own business would feel more “worth it.”

90 minutes every day are spent chasing down late invoice payments among U.K. SMBs, new research from challenger bank Tide revealed. The company said an average of more than $11,000 is owed to each SMB, with reports in SmallBusiness.co.uk noting the late B2B payments problem appears to bet getting worse, despite regulatory and financial services initiatives to address the matter.

$1 million in net revenue a day isn’t enough to pay suppliers on time for marijuana delivery startup Eaze, according to TechCrunch reports last week. The company is reportedly seeking to raise $35 million in series D funding, and an unnamed sources told the publication that Eaze has secured a $15 million bridge round from unknown investors. But one source explained some retailers have stopped selling through Eaze because the company is paying those brands late, highlighting what reports said is an all-too-common cash flow challenge in the industry.

$18.3 million will be paid to Sears Holding by its current owner, Transform Holdco, according to Footwear News, following a months-long legal dispute between the entities after Sears’ bankruptcy filing in October 2018. Sears had previously filed a lawsuit against Transform claiming it was owed $57.7 million from the purchase agreement. Transform later filed a countersuit, claiming Sears had intentionally delayed supplier payments. Despite the settlement, other legal matters are pending, and it’s unclear how the case will impact Sears’ suppliers awaiting payment.

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NEW PYMNTS STUDY: ACCELERATING THE REAL-TIME PAYMENTS DEMAND CURVE – NOVEMBER 2020

About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.

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