B2B Payments

Governments Step In To Quell Late Supplier Payments Pain

To provide relief to small suppliers as the coronavirus continues to squeeze supply chains and rock cash flows, U.K. grocery giant Morrisons announced Friday (March 13) it would be accelerating vendor payment terms to just 48 hours.

“We are Britain’s biggest single foodmaker, and we want to be there for the smaller foodmakers, farmers and businesses that supply Morrisons,” CEO David Potts said, according to recent Retail Gazette reports. “We’re a British family business and we will be doing our best to support them through this challenging period.”

It’s unclear whether other players in the industry, or whether conglomerates in other verticals, will follow suit. Yet what is certain is that small suppliers across markets and geographies continue to face cash flow pressures as a result of delayed and late invoice payments, and with coronavirus uncertainty, the financial pressure could be compounded.

Below, PYMNTS explores the latest news in late B2B payments, with new research from small business FinTechs, and growing debates over regulatory efforts in Australia and India to combat this challenge.

8 percent of payment dispute cases filed with Indian authorities have been resolved, Financial Express reports said. India’s Micro and Small Enterprise Facilitation Council launched its payment dispute resolution portal last October and has since seen nearly 37,500 cases filed. Only about 3,000 have been resolved, however, with delayed and late small- to medium-sized business (SMB) payments one factor behind the cases filed. India’s Finance Minister Nirmala Sitharaman recently included an SMB debt scheme in an effort to ease cash flow constraints SMBs face as a result of delayed invoice payments, reports noted.

8.6 days past-due is the average payment timeframe for New Zealand SMBs, Xero researchers have found, according to Newsroom.co.nz reports. On any given day, an SMB is owed $7,000 New Zealand dollars ($4,244), with more than $7.4 billion New Zealand dollars ($4.4 billion) in collective outstanding debt to small firms. In an interview with the publication, Xero, Craig Hudson, managing director New Zealand and Pacific Islands, described the matter as “an emotional issue.”

37 percent of marketers have delayed payments to ad agencies in the last year, according to a survey of 100 marketers recently conducted by the Association of National Advertisers. Only 18 percent said they had shortened payment wait times. Researchers also found an increase of 12 days on average for marketers to pay ad agency invoices between 2013 and 2020, with the average now standing at 58 days. According to the report, “business models and livelihoods of smaller players in the marketing supply chain” can be at risk as a result of delayed invoice payments, reports in Adweek said.

56 days is the average time it takes Australian businesses to receive payment, new research commissioned by Scottish Pacific found, Mortgage Business reports said. A survey of 1,200 SMBs revealed that suppliers wait nearly double the 30-day payment timeframe Australian officials have called for, with smaller businesses — those with between $1 million and $10 million in annual revenue — facing an even longer 66 days, on average, to get paid.

125+ Australian businesses and government agencies have promised to pay small suppliers on time, according to lobby group the Business Council of Australia, which has criticized businesses for imposing supply chain financing programs on vendors but argued that additional legislation is unnecessary to promote faster supplier payments. According to Small Business Ombudsman Kate Carnell, however, the promises that were made under a voluntary code of conduct are unenforceable, and regulators should step in, reports in The Australian said.

$184,600 worth of invoices is the most that U.K. construction giant Kier will finance in its supply chain financing program, reports in Construction News said recently. The company is trimming its financing initiative, which aims to accelerate payments to suppliers in exchange for a discount, and reports said Kier will continue to slash its supply chain financing caps as the year progresses. “Nobody should have to pay to get paid,” said National Federation of Builders CEO Richard Beresford in a statement, calling on Kier to end its early payment program entirely.

56.4 million hours every year is spent by SMB owners chasing late payments, new research from QuickBooks revealed. The company revealed its analysis in announcing a slew of new features for its accounting and financial management platform, including a new tool that automates recurring reminders for customers to pay their invoices, as well as a solution to chase overdue payments. The company has also added cash flow management tools and widened its PayPal partnership to enable card payments on bills to make it easier for clients to settle their invoices — when they decide to finally pay, that is.

——————————

LIVE PYMNTS ROUNDTABLE: MODERNIZING & SCALING FOR THE NEW NORMAL

The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

TRENDING RIGHT NOW