Data Begins Rolling In On Pandemic’s Late B2B Payments Impact

Although, anecdotally, the impact of the pandemic on B2B payment behavior has become all-too-clear in recent weeks, new research is beginning to roll in to take a broader view of exactly how the crisis has affected supplier payments.

Atradius‘ latest report found some disturbing news in the U.S., Mexico and Canada region, with Chief Market Officer Andreas Tesch highlighting in a statement that “the dramatic increase in overdue payments and the undeniable indications that the region has entered recession.”

It’s not the only market struggling. This week’s B2B Data Digest explores the latest data points from various regions and industries as suppliers continue to struggle to secure timely payments. However, according to Tesch, there is room for optimism, “despite the gloomy figures to date.”

Zero-day payment terms are Danish fashion firm Bestseller‘s efforts to support its suppliers, with a report in Fashion United noting that the company has vowed to pay vendors immediately until October to support their cash flow. Highlighting the importance for the company of a “closeness” within its supply chain of strategic partners, Bestseller said the initiative will instantly support vendors’ cash flows.

15 percent of Levi Strauss‘ corporate workforce will be cut, the fashion brand announced last week, according to Just-Style, signaling financial challenges that are influencing the company’s vendor payment practices. Yet the company is reportedly committed to supporting its supply chain; the firm has vowed to fully pay its suppliers for complete and in-progress orders around the globe, and it has also introduced a financing measure to connect suppliers to capital as they wait for invoice payments.

26.5 days are the average length of time it takes Australian businesses to pay their suppliers, new data from Xero provided to ABC.Net.au said. The data shows that the payment delays increased from an average of 25.5 days in February to 26.5 days in May, with the longest 10 percent of invoice payment delays expanding from 53 days to 58. Now, small business ombudsman Kate Carnell is calling for mandatory, regulated maximum B2B payment terms of 30 days.

43 percent of invoices across the U.S., Mexico and Canada were unpaid by their due date, new research from Atradius revealed. The firm’s USMCA Payment Practices Barometer report warned that the figure is a significant 25 percent increase from this time last year. Further, the value of invoices that are more than 90 days past due has doubled, while 4 percent of outstanding invoices across the region have been written off as uncollectible. In the U.S. alone, businesses reported a 72 percent year-on-year increase in payment defaults.

62 percent of small- to medium-sized businesses (SMBs) were found to have been subject to late or frozen payments, a new report from the U.K.’s Federation of Small Businesses has revealed. Analysts cited the pandemic as the biggest factor behind the figure, noting that despite the significant portion of SMBs that are facing delayed payments in the wake of the pandemic, only 10 percent of the 5,000 surveyed said they had actually renegotiated payment terms with their corporate customers. Researchers warned that the payment pains are felt nearly equally between private and public sector businesses.

66 percent of complaints over buyer mistreatment are related to delayed B2B payments, according to a summary report by the Competition Authority of Kenya (CAK) as reported by The Star. The publication said a government investigation into mistreatment of larger corporates against their small suppliers found debt settlement and invoice payment delays were the biggest offenses, with CAK’s head of manager-buyer power, Priscillah Njako, warning that vendors “are not getting good deals” with their corporate customers.

$1.6 billion in first-quarter net losses were reported by Vodafone Idea, a telco joint venture between the U.K.’s Vodafone and India’s Idea cellular. A report in Sputnik News said the losses are more than double the same period a year before, and according to the publication, the company’s financial constraints are contributing to possible supplier payment issues. Vendors that service Vodafone Idea’s telecom towers and other service providers are reportedly being late, with some sources saying June payments have not been paid. Vodafone Idea is said to be in discussions with suppliers to address the issue.