Late Payment Challenges Show Need For Supply Chain Solutions

Firms such as Greensill provide supply chain finance, which if used correctly can be a tool to combat late B2B payments. But amid Greensill’s apparent unraveling, the question must be asked whether something specific to the business has caused the pressure and troubles, or whether it’s what might be thought of as a one-time occurrence.

News came last week that Credit Suisse Group had frozen $10 billion in investment funds that powered Greensill Capital. Then, a report surfaced that operations were halted at Greensill Bank once Germany’s Federal Financial Supervisory Authority (BaFin) filed a criminal complaint against the financial firm.

Now, it might be the case that the supply chain finance model has a hiccup or takes a break. Investors might be a little more hesitant about providing the capital to back these early pay programs, making firms of all sizes adopt other methods of handling the everyday B2B activities and payments that exists between buyers and vendors.

This week’s B2B Data Digest looks at the challenges of late payments, which creates tensions between buyers and vendors, including purportedly owed funds to a produce supplier, a law to bring more transparency to payment times in Australia, the efforts of small business owners to negotiate terms and a British wholesale trade group’s request for flexibility from suppliers.

$100,000 is the rough amount that a California produce vendor claims that it is owed from Pump Restaurant and the closed Villa Blanca plus interest for the purported non-payment of delivered orders, Eater Los Angeles reported. Lisa Vanderpump, a reality TV celebrity, and her spouse, Ken Todd, own the eateries, per the report. Villa Blanca and Pump Restaurant closed for a time at the onset of the pandemic, and while Pump opened again in October, Villa Blanca shuttered for good last summer.

Companies and government enterprises that have yearly total income above 100 million Australian dollars (approximately $77 million) have to disclose their payment terms and practices for vendors who are small businesses biannually under the Payment Times Reporting Act 2020 in Australia, according to a post on Lexology from Baker McKenzie. “Companies should evaluate if they must report and, if so, become familiar with the reporting requirements under the Act,” the law firm said in the post. Even though the act does not require adherence to any particular payment periods, the firm said its purpose is to increase transparency when it comes to payment practices to let small companies arrive at educated decisions regarding their clients.

23 percent of small business owners negotiated customer and supplier payment terms as they navigate year two of the pandemic, according to the results of a survey of U.S. small- to medium-sized businesses (SMBs) published by Bill.com. In addition, the poll found that three-quarters of SMB owners are moving to debut new products and services in a bid to fuel expansion. The poll also discovered that even though 82 percent of SMB owners believe economic uncertainty has hampered their business growth, 47 percent believe that their firms will undergo growth in the first quarter of this year.

The Federation of Wholesale Distributors (FWD) is seeking to have the U.K. government’s 12 billion pound (approximately $17 billion) Trade Credit Reinsurance Scheme to be lengthened for a third time — from June to the conclusion of 2021, The Grocer reported. The trade group for food and drink wholesalers in the United Kingdom is also asking vendors to have some leeway with the payment terms for wholesalers prior to the hospitality restart in April to prevent “devastating” impacts to credit ratings throughout the industry. “We would urge suppliers to be flexible, given the state of the market and the shared risk to both wholesalers and suppliers associated with the restart,” FWD CEO James Bielby said, per The Grocer.