While 64% of senior finance managers have ‘sacked’ customers for consistent late payment and 41% have delayed paying wages, only 27% always pay their own suppliers on time and 69% 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% said late payment is unfortunate and should be avoided, 12% said it was “the norm” and 18% 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% cited invoice processing timescales as a reason for lateness, 26% said internal errors were to blame, and 29% said 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. 26% 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% 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. 88% said being paid without financial errors contributed to a good working relationship, followed by on time payment for 86%. Clients offering early payment discounts was important for 77%.
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.”