41% of Buyers Saw Late Fees on Vendor Payments Last Year

41% of Buyers See Late Fees on Vendor Payments

Payment frictions between buyers aren’t just inconvenient — they’re costly.

Forty-one percent of buyers have had late fees on vendor payments in the last year, according to “The Financial Performance Quandary: Leveraging Automation to Better Manage Non-Payroll Spending,” a PYMNTS and Airbase collaboration based on a survey of 225 executives at Software-as-a-Service (SaaS) firms.

About 21% of the executives said 10% or less of their payments to suppliers or vendors contained late fees due to delays in processing in the last 12 months, and another 20% of the executives said more than 10% of such payments contained late fees.

Getting to the Source

In many cases, data errors and other key challenges in managing non-payroll spending are causing delays in processing payments. These, in turn, lead to the imposition of late fees.

About half the respondents said data entry errors are a challenge for their firms, while about one in four said the same of difficulties dealing with fraud and about one in three said that of difficulties in accessing real-time data.

Data entry errors and payment delays can often be attributed to companies’ reliance on processes that are manual and labor-intensive.

The time spent managing employees’ non-payroll spending adds up to about 17 hours a week —about eight hours spent tracking and collecting receipts and another nine processing expense reports, PYMNTS research found.

Automated Solutions

For these and other reasons, just over half of all SaaS businesses now use an automated system to manage non-payroll spending — and another 38% are at least somewhat interested in implementing such a system.

Among the components of these automated systems are corporate cards that can be used by employees, the ability to make accounts payable (AP) system payments based on suppliers’ invoices, and the ability to reimburse employees for expenses, when required.

Automating accounting functions can cut down on the time spent doing tasks such as tracking down purchase orders, matching them against invoices and forecasting when payments will hit accounts, Robin Sharma, Airbase’s senior manager of accounting, told PYMNTS in July.

Read more: Small Tools Bring Big Payoff as SMBs Clamp Down on Spending

Spend management platforms, which are offered by Airbase and others, deliver real-time data that in turn translates into real-time visibility into cash in and cash out of company coffers, Sharma said.

That holistic view is particularly useful when it comes to payments, Sharma added. Making the transition to digital options, including card payments, wire transfers and even supplier portals, levels the playing field between buyers and suppliers.

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