Late payments are a complex problem that isn’t always the result of large corporate buyers abusing their leverage over small suppliers by withholding payment.
Rather, as Praetura Invoice Finance managing director Ray Lowrey recently told PYMNTS, the discussion around late B2B payments should also perhaps expand to include the matter of lengthening payment terms.
“I’d argue, in many ways, that a problem just as serious has been the propensity for many (usually large) customers to push for or impose longer payment terms on their [small to medium-sized] suppliers of up to 90 to 120 days,” noted Lowrey. “Many [small to medium-sized businesses] feel that they have no choice but to agree to these [terms], and therefore, have to wait for their money and find ways to cope with the impact to working capital.”
In this week’s B2B Data Digest, PYMNTS once again looks at the data behind recent late payments matters, with the U.K. and South Africa ramping up their efforts to accelerate B2B payments to small suppliers.
30-day payment terms are being encouraged by South Africa’s Small Business Institute, which, according to IOL reports, is urging the government to “slay the monster” of late supplier payments to small and medium-sized businesses (SMBs). Reports noted that South Africa’s National Treasury released figures last week outlining findings of noncompliance within government entities, which are also expected to pay supplier invoices within 30 days. “We continue to be gravely concerned that there is a lack of consequence management by officials and departments and state agencies that violate this policy,” Small Business Institute chief executive John Dludlu said in a statement. “We need to slay the monster of late payments to [small business] suppliers. Now is a good time to do this if we are serious about getting [small businesses] to contribute 90 percent of jobs by 2030.”
98 percent of all invoices received by South Africa’s Western Cape government were paid within 30 days, making it only one of a handful of South African government entities that have adhered to requirements for timely supplier payments to SMBs. Government reports noted that the Western Cape Provincial Government accounted for just 1 percent of supplier payments paid after the 30-day time limit for the last fiscal year.
$612 million is owed to U.K. energy regulator Ofgem by electricity supplier Symbio Energy, Ofgem has said, according to Energy Live News reports. The payments are the result of the supplier’s Feed In Tariff (FIT) payment obligations, a scheme that aims to help fuel payments to small-scale renewable energy businesses, paid for by large energy suppliers. The deadline passed earlier this month — Ofgem and the late payment will now reportedly be issued on September 3, according to Symbio Energy. Ofgem noted that this payment delay means further payment delay to those small renewable energy businesses.