B2B Payments

From BT To Gucci, Big Brands Add Support For Vendor Cash Flow

With delayed and late B2B payment terms continuing to raise concerns throughout supply chains around the world, some of the biggest brands have taken measures to support the cash flow of their vendors.

Not all companies are taking the same tactic, however. Some are implementing shorter payment terms, while others have launched supply chain financing programs and other ways to connect vendors to capital. This week's B2B Data Digest looks at the strategies behind companies like BT, Gucci and others to support faster small vendor payments.

One in four U.K. small and medium-sized businesses (SMBs) doubt they'll survive to 2021 as a result of late payments, according to new data released late last week by small business financing platform iwoca. In announcing a new trade financing solution, iwocaPay, the company also published its latest report on the ongoing late B2B payments crisis, finding that 40 percent of small businesses in the U.K. now have more than $12,670 stuck in B2B receivables as they wait for their invoices to be settled.

3 to 4 percent interest rates on some supply chain financing programs have called into doubt recent efforts by General Motors and Ford Motor to introduce their early payment discount programs for vendors, according to Reuters reports. The automakers have launched programs that allow faster payments to suppliers in exchange for a discount, a benefit for suppliers that would otherwise have to wait between 40 and 60 days for payment, the publication said. The programs come at a cost, however, and Amherst Partners partner Scott Eisenberg told Reuters, "It is not a silver bullet."

Five corporates have been reinstated to the U.K.'s Prompt Payment Code, according to recent reports, including IBM and BT. The interim Small Business Commissioner's decision to reinstate the firms follows analysis of their supplier payment performance. IBM, for instance, was paying 55 percent of its invoices in 60 days or less; it now pays 90 percent of bills within that timeframe. Screwfix, Seddon Construction and Keir Highways were also reinstated to the PPC after demonstrating improved vendor payment habits.

38 percent of B2B invoices are overdue in the U.K., Sidetrade's latest data reveal. In its latest report on the state of late payments, Sidetrade found that as of May 25, the finance, insurance and real estate sector has been hardest hit by overdue B2B invoices, with at least 76 percent of invoices more than 10 days past-due. Meanwhile, the information, communication and technology (ICT) sector sees 60 percent of its invoices overdue, and leisure and hospitality has 55 percent of invoices over 10 days past-due. Despite the troubling findings, Sidetrade noted that across all six nations analyzed, there has been a significant improvement in invoice payment habits — though it warned that late payments remain high across the board.

67 percent of businesses expect revenue declines as a result of the pandemic, and according to new research from supply chain technology firm Sedex, a survey of 3,300 corporate buyers and suppliers across 118 markets found the garment and footwear industry, as well as construction, to be among the hardest-hit by supply chain disruption. While the Sedex report did not examine B2B payment habits, the report did find that 56 percent of B2B vendors report their corporate customers are taking some form of supportive action. At the same time, 20 percent said they have had orders canceled from their buyers.

20,000 employees of Gucci suppliers may benefit from a new agreement between Gucci and Sanpaolo, Italy's largest retail bank. Gucci recently struck a deal with the financial institution that aims to connect Gucci's vendor base to the same financing that Gucci is able to obtain. Citing the challenge of small suppliers often struggling to secure funding from large banks, Gucci said the initiative aims to accelerate and reduce friction for its supply chain to access capital.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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