As the data around the economic toll of the coronavirus pandemic rolls in, rallying cries from around the world are growing louder to support small businesses. Increasingly, those cries include calls to action for corporates to pay their small suppliers as more vendors struggle with late and delayed payments — and for government entities to support those measures.
In Malaysia, a reader submission for The Malaysian Insight says the nation's rallying cry, "Kita jaga kita," should apply to the business community supporting its small business members though consistent supplier payments. In the U.S., Fundbox Chief Financial Officer Marten Abrahamsen published an open letter with a similar aim, arguing that the coronavirus pandemic has only worsened a problem that was troubling before the crisis.
"In 2019, our company collaborated with PYMNTS and surveyed over 1,000 people in the U.S. who worked at companies of varying sizes ... We learned that in the U.S. alone, there were $3.1 trillion in B2B receivables owed at any given time," said Abrahamsen. "There have been many articles in the past two weeks encouraging businesses to preserve their cash so they can outlast the coronavirus. That’s fine if you owe a huge enterprise with enough cash reserves to last them months, if not years. But to small businesses, it could mean the difference of staying in businesses or closing shop."
For some vendors, the situation is especially precarious. Last week, Bloomberg reported that some suppliers of department store Macy's are no longer protected through trade credit insurance, with providers Euler Hermes and Coface no longer writing policies that cover Macy's.
Below, PYMNTS explores the figures behind some of the latest news in late and delayed B2B payments, from new stats on struggling cash flows to new initiatives aimed at easing the pain point.
7-day payment terms should be the new norm for the National Health Service, according to NHS England and NHS Improvement, which are calling on NHS organizations to accelerate their supplier payments from the typical 30 days. The guidance is also urging these organizations to continue paying vendors, even in cases where orders may have been paused.
30-day payment terms would help Singapore SMBs manage cash flow, says Singapore FinTech RAIBU. The firm recently launched its Pledge2Pay.sg effort, which sees larger corporates vowing to pay their suppliers within 30 days. Citing data from PwC, RAIBU said in a press release that corporates across Asia average about 70-day invoice payments, which would add to cash flow troubles for small and medium-sized businesses (SMBs) amid the pandemic, it noted.
71.3 percent more French B2B invoices are paid 10-plus days past due compared to pre-pandemic levels, the latest data from SideTrade revealed. Its Unpaid Invoice Tracker continues to track invoice payment trends, finding a more than 20 percent increase in late payments in Great Britain, more than 32 percent in Spain, and overall, a 40.7 percent increase across geographies in Europe.
90- to 180-day accounts receivable (AR) financing agreements could provide SMBs much needed relief, the American Institute of CPAs (AICPA) recently proposed in a letter sent to the Federal Reserve. The AICPA is calling on the Fed to establish a government-backed AR financing facility to help ease the cash flow pains that late and delayed payments have caused for struggling small businesses, noting the AR burden continues to grow for many firms, with funds under the CARES Act having the potential to allow those businesses to grow their businesses and increase their investments.
$150,000 in unpaid invoices was recently discovered by the city of Portage, the Chicago Tribune reported. The bills were approved by the Board of Works at a time when the city had the funds to pay them, but today, the economic downturn has forced city officials into using an economic development income tax to settle the invoices. The bills were discovered just before the coronavirus pandemic hit, reports said, and add to the city's existing financial challenges.
$3 billion in B2B payments to Bangladeshi factories are in limbo, according to Yahoo Finance reports. Some of the U.K.'s largest retailers have canceled orders with these factories, the report said, citing ITV News and the Bangladesh Garment Manufacturers and Exporters Association. Now, U.K. trade envoy to Bangladesh Rushanara Ali is calling on Chancellor Rishi Sunak to name-and-shame the retailers that are canceling orders and nixing B2B payments, urging these firms to pay for orders that have already been completed, reports said.