FinTech Steps In As Invoice Payment Wait Times Inflate

When it comes to late B2B payments, there’s good news and bad news.

The good news stems from the U.K., where new research has found that fewer invoices were paid late to small businesses (SMBs) in 2019 than in 2018. Among the success stories of the nation’s efforts to combat late supplier payments is construction firm Kier Construction, which, according to The Construction Index, has been reinstated to the U.K. Prompt Payment Code as of last month, following an internal initiative to improve supplier relationships and engagement.

“We remain committed to paying all our suppliers to agreed terms, and have made significant improvements in our payment processes whilst continuing to offer our subcontractors, particularly [SMBs], a range of accessible payment plans,” said Kier Group CEO Andrew Davies.

FinTech innovation has taken steps to address the late payments challenge in construction and beyond. In a recent conversation with PYMNTS, Levelset CEO Scott Wolfe noted that FinTech solutions have an opportunity to address the many “fragmented, tiny players” in a single, large construction project “who are overlooked with respect to the payments problem.”

This week, investors backed a U.S.-based FinTech that positions itself as a provider of accounts receivable services to help small businesses recover revenue stuck in unpaid invoices.

However, the bad news is that wait times for invoice payments in the U.K. have doubled, with knock-on impact on businesses’ cash flow and ability to take on new work — and renewed criticism questioning the government’s ability to address the challenge. Below, PYMNTS runs through the latest data behind the ongoing fight against late B2B payments.

23 days: the average time a U.K. small business waited to receive payment on a past-due invoice in 2019. That’s nearly double the average late payment of 12 days recorded in 2018, new data from MarketFinance revealed, according to AccountancyAge. In total, $44.5 billion is owed in late payments to U.K. SMBs, at an average of more than $44,871 owed to each company. The good news, researchers noted, is that fewer invoices were paid late in 2019 compared to 2018 (39 percent versus 43 percent).

87 percent: the portion of U.K. SMBs that said they have been forced to take on less orders because of cash-flow constraints related to late payments, MarketFinance found. According to MarketFinance External Relations Director Bilal Mahmood, “Overall, it seems who you are doing business with, and where they are based, is important to know for a small business if they need to forecast cash flow.” He added that while regulatory efforts like the U.K. Prompt Payment Code are effective at raising awareness of the late payments challenge, they “need more bite.”

136 contractors: selected by the U.K. Crown Commercial Service’s framework agreement, which opens up an opportunity for public sector firms to provide construction services to build schools, hospitals and other structures. Among them is Balfour Beatty, the largest construction company in Britain, according to The Construction Index, which noted raised concerns over Balfour having been awarded government work despite its suspension from the U.K. Prompt Payment Code for late payment practices.

$1 million: both the value of revenue that CollBox has recovered in unpaid invoices for SMB customers, and the value of Seed funding the company recently announced. CollBox which raised the funding from Bala Investments, Long View Technology Ventures, Capital Factory and the Alamo Angel network analyzes small businesses’ accounts receivable, and offers tailored collection services to help firms recover revenue on past-due invoices. According to CollBox CEO and Co-founder Cameron Desautels, late payments can cause “one of the biggest risks” to small businesses: cash-flow challenges.