One year since global retailers canceled garment orders and put off payments, industry players are banding together in an effort to combat B2B payment mishaps and promote fairer practices in the industry. This week’s B2B Data Digest looks at that initiative, plus other late payment stories around the world.
26 percent of U.K. small business owners cite late payments as the biggest cause of anxiety, new data from Direct Line business insurance revealed. The company surveyed entrepreneurs in the country about their legal concerns, finding that 41 percent say they consider legal matters to be stressful — and more than one-third say those matters have caused sleepless nights. In addition to late payments and debt recovery, other top sources of stress include health and safety, Brexit-related disruption, data protection (General Data Protection Regulation, or GDPR) matters, and furlough and redundancy issues.
45-day payment terms are the norm for Pacific National, an Australia-based rail haulage conglomerate. According to the Australian Financial Review, the firm is now reviewing its accounts payable (AP) and supplier payment practices, which will include a migration away from its current use of C2FO’s early payment technology, which facilitates discounts on invoices paid early. The publication said the firm’s head of risk, Dirk Verwohlt, wrote to suppliers one day after Greensill Capital declared insolvency to warn them of potential “income discrepancies.” He provided those vendors with Pacific National’s bank details and noted that some refunds “may need to be made,” noting that some suppliers may have been paid twice for the same invoices. In a statement, Pacific National said its AP audit is not linked to Greensill’s collapse.
90-day payment terms may not be ideal for most suppliers, but it’s the maximum payment term that garment suppliers across the Middle East and Asia are seeking from retail buyers after a tumultuous year. Vendors across nine countries — China, Bangladesh, Myanmar, Cambodia, Vietnam, Pakistan, Turkey, Morocco and Indonesia — are banding together to demand more favorable and responsible payment practices among corporate buyers. The initiative follows reports that some of the world’s leading clothing retailers, including Gap and Primark, canceled orders totaling nearly $3.7 billion last March and April. Now, the group of vendors is drafting a document to be finalized late next month, with intentions to foster improved purchasing and B2B payment practices.
£61 billion ($84.3 billion) worth of late payments is currently owed to U.K. SMBs, research from PennyFreedom.co.uk recently revealed. Two-thirds of the nation’s six million small businesses say they have at least one invoice that is past-due from a corporate customer. To put these figures into perspective, researchers noted that the current value of unpaid late invoice payments would be able to pay for the hiring of more than two million people across the country, wiping out the U.K.’s current state of unemployment, in which 1.74 million people are out of work. While suppliers are struggling with late payments, the report also found that corporate boards are facing pressure to lengthen their invoice payment practices, stretching from the current average of 33 days to 56 days. “The damage it does to small businesses and sole traders can be immense,” said Penny Co-Founder Colin Gunnell in a statement, noting that the company was “shocked” by the report’s findings.
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April 05, 2021 at 07:00PM
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