US Gets Attention Amid Late Payments Trends

Turns out the U.K. has some competition when it comes to late payments.

We are being tongue-in-cheek, of course. Late payments are everywhere, it seems – a fact of life in the B2B realm. And the impact or epidemic varies depending where you look.

Headed into a shortened holiday week, the spotlight has been trained a bit on the United States, where late supplier payments are gaining traction. A recently debuted report from Atradius – “The Americas: an increase of overdue B2B receivables” – shows that more than half of those surveyed see at least some of their invoices falling into the “uncollectible” bucket. The impact stems from customers going bankrupt or out of business.  

And the cross-border effect? Some North American firms will not extend credit terms to overseas customers. Overall, across North America, roughly 50 percent of invoices are past their payment date thus far in 2018, compared to less than 49 percent last year.

Beyond the spotlight of the U.K. and the U.S., getting a bit more granular, the impact of late payments affects any number of demographic fault lines – and, in fact, even correlates with gender. According to a report in Business Day citing a study by Sage, discrimination wends its way into late payments in South Africa, with women more likely than men to be paid late.

South Africa was just one of the identified regions where women were being paid late, with 18 percent of businesses reporting such late payments and 10 percent of invoices written off. Looking ahead 12 months, said Sage, 25 percent of female executives will spend time chasing late payments, which hurts productivity. The problem hits smaller firms hard, as 40 percent of small to midsized firms also fail to follow up on late payments, and as many as 25 percent of firms do not have resources in place to go after those payments.

Gig Economy: Hurt by Payment Issues, Too

Think late payments just hurts the supply chain purely through traditional means? Think again. Forbes cites a report from Tipalti, Crowdsourcing Week and Shareable.net, which found that 73 percent of gig workers are willing to leave marketplaces should they be disappointed in payments activity. The report also found that 96.6 percent of workers value being paid on time, and 95 percent want to access payment status information. Payment transparency and timeliness take precedence, perhaps, when gig work remains a primary source of income – which is true for roughly half of those surveyed.

Kroger Payments Saga Continues

Some food for thought as the Kroger payments saga continues: Western FarmPress reports that the grocer’s efforts to standardize payments for produce suppliers to a net 90-day term – which becomes effective next month – may be in violation of federal law, as asserted by the California Fresh Fruit Association. The Association says the legality of the plan remains in question.

As the report noted, the move beyond the 30-day window could be a violation of the Perishable Agricultural Commodities Act, forcing companies to carry debt longer than is allowed by law. Plus, the Association states, it would set a poor precedent, as it would allow companies to in turn stretch their own payment terms. Kroger has noted that the new policy offers an early payment option, which in turn levies a 72 basis point fee on a $1 million invoice.