B2B Payments

Late Supplier Payments Tied To Economic Ebbs And Flows

Despite economic volatility, not every business is struggling.

This week's Late B2B Payments roundup reflects the correlation between companies' financial positions and their supplier payments behavior. In France, officials fined one firm for late payments after it raised financial concerns. On the other end of the spectrum, another firm has announced accelerated supplier payments as it expects a strong fourth quarter.

France Fines Sugar Producer Over Late Payments

Although government initiatives to combat late payments have grown in number over the years, many of those efforts remain voluntary, with officials lacking the legal power to actually enforce the faster supplier payments that large corporates make.

Yet in France, the government has just issued a fine against one company for late payments.

Reuters reported late last week that sugar and ethanol producer Tereos was fined $459,000 by the nation's Directorate General for Competition, Consumption and Fraud Prevention (DGCCRF) for delaying supplier payments. Citing a watchdog filing, Reuters noted that Tereos had previously sought price reductions from its vendor base, citing "difficult economic circumstances.”

This isn't unusual for the DGCCRF, however, which regularly fines corporates for late payments to their suppliers, Reuters noted.

Link4 Helps Australia Government Accelerate Vendor Payments

About four years ago, the Australian government launched an initiative to accelerate its payments to suppliers. Now, that promise has led to a collaboration with invoice delivery solution provider Link4. According to an InDaily report, Link4 has secured a contract with the federal Treasury to connect it with the Pan-European Public Procurement Online (PEPPOL) network, allowing the Australian government to streamline its invoice receipt and accelerate vendor payments.

"This project started back in 2016, when the government was looking at ways to streamline the interaction with the supplier and find ways to pay suppliers faster," explained Link4 Co-Founder and Chief Technology Officer Sam Hassan in a statement. "In January, the government promised to pay suppliers in five days if they delivered an invoice, helping with the cash flow for small businesses during this COVID time. So, any business can send their invoices to the Department of Treasury and we can deliver those invoices electronically to the department systems. The ultimate goal is to allow small and medium businesses to deliver their invoices to the department and get paid faster."

The integration is expected to go live next month, according to the report.

SpiceJet Delays Vendor Payments

India-based budget airline SpiceJet is the latest conglomerate to delay supplier payments in an effort to strengthen cash flows amid the pandemic. According to a MoneyControl report, SpiceJet is deferring payments to suppliers and government agencies, a plan revealed during its first quarter earnings report.

The publication said as the company's net losses increase and its net worth decreases, SpiceJet has "deferred payments to various parties, including vendors and its dues to statutory authorities." The news comes several months after separate reports noted two lessors were discussing plans to terminate contracts with SpiceJet.

"This is the worst-ever crisis to hit the aviation sector," said SpiceJet Chairman and Managing Director Ajay Singh during an earnings call. "Flight operations were suspended for the most part of the quarter, and the partial resumption of flights initially and the weak demand thereafter was a reminder of the significant problems that this pandemic has resulted in."

Primis Moves to Net15 Payment Terms

Israel-based video discovery platform Primis is taking a different approach to its supplier payments. In a press release, the company said it will accelerate supplier payments to net 15 days under its Net15 program.

Primis will pay its publishers, vendors and other business partners within 15 days after receiving an invoice, a testament to the company's strong cash position as the firm said it is "expecting an amazing Q4," according to Co-Founder and Co-CEO Rotem Shaul. "Primis will help partners, publishers and vendors deal with COVID and financial challenges via payment terms of net 15 days.”

Describing the motivation behind the new program, the company said in its announcement that it follows a period of high growth years ago that put significant pressure on its cash flow. During that time, Shaul recalled, one of its largest clients accelerated payments to Primis; this Net15 program is a way of "paying it forward," the firm said.

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