Many UK businesses are demanding speedy payments from their business customers despite not paying their own suppliers on time, research from eProcurement software company Wax Digital has shown.
While 64 per cent of senior finance managers have ‘sacked’ customers for consistent late payment and 41 per cent have delayed paying wages, only 27 per cent always pay their own suppliers on time and 69 per cent admit to being frequent late payers.
Over 200 executives were questioned independently by Sapio research on behalf of Wax Digital in late 2017. While 43 per cent said late payment is unfortunate and should be avoided, 12 per cent said it was ‘the norm’ and 18 per cent said it was ‘out of their control’.
The research showed that many invoice payment delays are not intentional but simply down to ineffective and inaccurate processes that could be improved. For example, 31 per cent cite invoice processing timescales as a reason for lateness, 26 per cent said internal errors were to blame, and 29 per cent say it happened when the purchaser was late notifying finance about what they had bought.
As well as the buyer’s shortcoming, often it’s the quality and accuracy of suppliers’ invoices that delays payments. Twenty-six per cent pay late because of supplier errors, such as inaccurate wording, missing purchase orders or incorrect values on invoices. Providing online portals for supplier eInvoicing seems to be a popular solution to these issues – 97 per cent said they would use this technology if supplied by their customers.
If organisations want to maintain a healthy supply base, consistent invoice processing is essential. Eighty-eight per cent said being paid without financial errors contributed to a good working relationship, followed by on time payment for 86 per cent. Clients offering early payment discounts was important for 77 per cent.
Daniel Ball, director at Wax Digital, comments, ‘While in some cases late payments is an unfortunate vicious circle caused by businesses simply not sticking to the terms of their contract, there are many times when it is simply the result of inefficiency. Poor invoicing processes don’t just mean delays with money changing hands; they can also mean an end to carefully sourced supplier relationships, and reputation, costing the business much more in many different ways. But they are very simple to solve, through the adoption of eInvoicing processes.’