Late payments present challenges for SMEs
Late payments plague sellers and suppliers around the world, with small businesses often having overdue invoices.
This week’s B2B Data Digest highlights the prevalence of late payments around the world, in addition to the means by which FinTechs and governments aim to address this challenge.
60% is the minimum percentage of small businesses that regularly have late invoices paid, according to a announcement of the British banking platform Tide. “This creates a huge cash flow problem and puts small businesses in serious danger of collapse, especially in the current turbulent climate,” the company said in the announcement. Tide recently partnered with recurring payments company GoCardless to roll out a service that will allow its members to accept bill payments by direct debit. Members will be able to set a time to collect payments when the invoice becomes due.
43% is the share of companies that reported an increase in the number of late payments, as indicated in the Monitoring of PYMNTS disbursements. The statistic comes as businesses of all sizes do their best to stay on top of changing payment trends and consumer expectations as COVID-19 continues to affect the way money is moved. These rapidly changing trends have also led most businesses to worry more about their own cash flow status – knowing that the status of their inbound and outbound payments can make or break for these entities.
37 is the average number of days companies are paid after the due date, according to the data cited in a announcement of Australian Small Business and Family Ownership Ombudsman. Kate carnell, the mediator, called on large companies to report their payment deadlines to small businesses as soon as possible, with the payment deadline reporting system due to go into effect in January. Carnell said it is important for companies with annual sales exceeding $ 100 million take note of the intent of the legislation. “These new laws represent an important step forward at a time when small Australian businesses are suffering and must be paid in time to survive,” said Carnell.
14.7% is the percentage of outstanding inter-company (B2B) receivables on average, as indicated in the month of September PYMNTS B2B Payments Innovation Readiness Report. Overdue invoices are not just a problem for SMBs: for companies that generate half a billion in annual revenue, 16% of their B2B receivables are past due, compared to 14.3% for large companies. average generating between 50 and 500 million dollars. COVID-19 has led businesses of all sizes to revisit their accounts receivable (AR) processes, where past due sales days (DSO) – the number of days it takes to collect payments – are stretched.
About $ 1.49 billion in late payments were owed to renewable energy producers by distribution companies, Mercom India reported, citing information from the PRAAPTI portal of the Ministry of Energy. In addition, the portal said 66 distribution companies owed an estimated $ 16.44 billion in overdue payments on just under 19,950 bills to power producers at the end of August. In contrast, distribution companies had to pay about $ 16.07 billion in overdue payments on just under 19,200 bills in July.