Efforts To Address Late B2B Payments Go Global

Though the coronavirus pandemic has highlighted the impact of late B2B payments in the U.S. — both due to U.S. corporates paying their suppliers late, as well as U.S. vendors struggling with delayed payments — the matter is, and always has been, a global one.

This week’s late payments roundup finds new efforts from corporates and their financial service providers to address the issue, while separately, research warns that late B2B payments are adding extra pressure to small companies’ cash flows — with stories from the U.S., U.K., Australia and Malaysia.

Gap Reverses Vendor Payment Course

Apparel brand Gap recently announced a reversal of its initial decision not to pay vendors for canceled orders. Reports in Sourcing Journal said the company, which owns Old Navy, Banana Republic and Athleta as well as its Gap brands, has now vowed to pay vendors in full for canceled orders.

“While we have extended payment terms on certain orders, in the immediate term we are providing low cost financing to our vendor partners, and are working with our banking partners to increase the amount of funds available within the program as we move forward,” the firm said in a statement.

U.K. Supermarkets Put On Watch

While the pandemic has introduced cash flow constraints for many industries — like apparel — and led to delayed vendor payments, supermarkets have emerged as a leader in on-time and even accelerated vendor payments amid the market volatility. Yet new analysis by The Grocer suggests supermarkets may not be as on top of their accounts payable as previously thought.

Speaking with the publication, Federation of Small Businesses Senior Policy Advisor Daniel Bellis warned that even top-performing vendor payers may still have lackluster processes in place.

“Almost every sector is a poor payer, so it is no endorsement to be better than average,” he said. “It is very easy to damage the supply chain, and during coronavirus it is harder than ever for small suppliers. If businesses aren’t careful there won’t be a supply chain to come back to in some cases.”

New data from Pay.UK cited by the publication found that top food companies, including Magners and United Biscuits, take more than 60 days to pay vendors, with at least 15 percent of their invoices being paid outside of agreed-upon terms.

NAB Warns Of Spiking Late Payments

National Australia Bank (NAB) issued a new report that warned late payments are piling up for the nation’s small and medium-sized businesses (SMBs), Mozo reports said. In its “Supporting Economic Recovery” report, NAB found a total of AU$115 billion (about US$80.5 billion) in late payments every year.

The bank also applauded recent regulatory efforts to curb late B2B payments to small suppliers under the Payments Time Reporting Bill 2020, which will require the largest corporates to report on their vendor payment practices.

The publication also pointed to recent data from small business accounting platform MYOB, which found 38 percent of SMBs say they face financial stress as a result of late payments. Forty-two percent said they are concerned about cash flow because of late payments.

HSBC Malaysia Enables Proton To Speed Payments

In Malaysia, HSBC Bank Malaysia is implementing its HSBC Supply Chain Finance program for automotive company Proton Holdings, which is seeking the financing arrangement in an effort to accelerate vendor payments, according to The Edge Markets reports.

In a statement, HSBC said the program will enable Proton to pay suppliers early in exchange for a discount, an initiative the bank said is “getting increasingly more important for SME suppliers in Malaysia under the current environment.”

HSBC also noted that it is implementing a streamlined and digital vendor onboarding service to help suppliers be able to access capital at rates that can be more affordable than if they were to seek credit from their own financial institutions, thanks to Proton’s stronger credit profile.

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