Delayed payments continue to plague suppliers, particularly Small Businesses, and unfortunately, the global pandemic has only worsened this pain point. This week’s B2B Data Digest looks at the latest stats in the fight against late payments, and finds several instances in which the COVID-19 crisis has exacerbated the late payments problem.
25 companies surveyed in the denim supply chain have revealed “destructive” behaviors from their corporate clients, according to a new report by Transformers Foundation. In addition to seeking excess discounts and canceling orders, the vendors have revealed delayed payment practices in Transformers’ new report, “Ending Unethical Brand and Retailer Behavior: The Denim Supply Chain Speaks Up.” The report discovered that most of the vendors surveyed experienced such behavior, and identified “several” retailers, brands or importers that reduced to pay for goods. In one instance, a brand required 60-day payment terms of a vendor, then filed for bankruptcy 14 days later. As a result, more than half of the suppliers surveyed said they have trouble paying their own vendors on time.
35 days, on average, is how long Travis Perkins will take to pay suppliers, the building supplies company recently said. Reports in The Construction Index revealed that Travis Perkins notified its suppliers it would be extending payment terms, citing work-from-home requirements of its accounts payable staff related to COVID-19. One supplier decried the decision, telling the publication, “They are seeking to change the payment terms without any discussion with their suppliers and use their size to bully small businesses but giving COVID as the reason.”
54 days, on average, pass before Chinese businesses receive payments from corporate customers, new analysis from the Financial Times reveals. That’s twice as long as businesses in the country waited five years ago. According to reports, these B2B payment delays are exacerbating the challenge of businesses to recover amid the pandemic. Speaking with the publication, Hang Seng Bank China economist Wang Dan said, “The receivable problem is across the board. It suggests the economy is not in a normal shape.”
60+ countries are included in Taulia’s new International Payment Terms Database, the latest solution launched by the company. The database is a collection of information of local laws and policy around payment terms, enabling businesses to remain compliant and understand B2B payment term legislation in various markets. In a statement, Taulia VP of Growth Bob Glotfelty said, “We see that many countries understand the importance of providing timely payments to suppliers, especially as it relates to small businesses.”
$1.16 million in unpaid bills led to one food vendor suing Ohio Valley University, which has now been ordered by a circuit court judge to pay the supplier. Reports in The Parkersburg News and Sentinel said OVU did not respond to the complaint by the food vendor alleging the late payments related back to a 2014 agreement. OVU President Michael Ross told the publication that the school acknowledged its debt. “Unfortunately, we could not reconcile the exact amount of debt before COVID-19,” he said.
£23.4 billion (about $30.8 billion) in unpaid invoices is due to U.K. small businesses, according to the Department for Business, Energy & Industrial Strategy. An estimated 50,000 small businesses close every year as a result of late payments. BusinessLive cited these figures in its recent reports of insolvency and restructuring rate body R3, which is speaking out in favor of government efforts to combat the late payments challenge. The Office of the Small Business Commissioner may soon secure greater power to tackle the issue, reports said, with R3 chair Eleanor Temple telling the publication, “Late payments of invoices, whether deliberate or otherwise, is one of the key factors pushing businesses in Yorkshire into financial difficulties, and while a good deal of progress has been made in toughening the rules around late payments in recent years, there’s still much more to be done.”