A recent survey conducted by PayTech firm GoCardless found 86% of respondents agreed that one late payment can impact everyone in the supply chain.
The survey – conducted in tandem with 500 UK business decision makers – suggested that a single late payment can not only affect the business immediately but wreak havoc as it tumbles down the payment flow.
Of the 31% of business surveyed that had paid a supplier late, it was found close to half – 47% – said it was due to late or failed payments from their customers. Up to 38% of respondents said that receiving late payments had led to them considering delaying payments to their own suppliers – causing even more problems in the supply chain.
Around 35% of firms stated that late payments would make them think about hiking the price of their products or services for customers, while 26% said they would consider postponing their hiring plans.
An overwhelming majority of respondents – 97% – agreed that every business should be paid on time, with 20% saying that the first thing they would do if they collected all of their receivables of time is to pay their own suppliers quicker.
GoCardless recently published its 2021 Global Payment Timings Index, which is an analysis of over 40 million payments that looks to establish benchmarks for what length of time it takes for a business to get paid.
The index found that businesses that use payments like bank debit have the shortest wait between charging their customers and receiving funds at 3.6 days. Meanwhile, physical methods such as cheques can lead merchants to have to wait around 22 days.
GoCardless VP of small business Pranav Sood said, “Slow and late payments present a challenge to businesses of all sizes, but what is often ignored is the trickle-down effect this has on both suppliers and customers. Prompt payments power change that can boost the entire economy. This is why GoCardless is pushing for improvement, not only for the businesses we support but also for the suppliers and customers implicated in the wider chain.”
GoCardless recently teamed with Good Business Pays, which is a movement that aims to bring an end to sluggish and late payments.
Institute of Directors’ – a member organisation of Good Business Pays – director of policy Roger Barker added, “These findings indicate that paying on time is not something that benefits a single organisation. It has a positive impact up and down the supply chain, and beyond. All businesses must play their part to better this issue for the good of the broader economy, especially as we rebuild in this post-Covid world.”
Copyright © 2021 FinTech Global
