Late payments don’t just affect a company waiting to be paid – it’s disrupting the entire supply chain – and can result in increased consumer costs, or a reduced ability to hire new workers. ۔
These are the results of a report by payment service provider GoCardless. Polling 500 UK decision-makers for the report, the company found that 86% agreed – a late payment affects the entire supply chain.
About one-third (31) of those who have made late payments to their suppliers, about half (47) said they had no choice, because their customers were late in making their own payments. About two out of five (38) said they consider paying their suppliers late because of late payments, which only “pushes the problem down”.
The effects of this “vicious cycle” transcend payments. More than a third (35) of respondents said they would consider raising the prices of their products and services to customers, while a quarter (26) said they would consider postponing new recruitment plans. Thought about
Promoting the whole economy.
The supplier does not seem to be doing so, but 97% agreed that everyone should be paid on time. In addition, one-fifth of respondents pay their suppliers first after payment.
GoCardless says businesses that receive payments through physical means, such as checks, have been forced to wait an average of 22 days. Those who use account-to-account payments, such as bank debits, wait less than four days on average.
Go Cardless KVP Small Business Pranav Sood says that late payments often go unnoticed by both suppliers and customers.
“A change in the power of instant payments that can boost the economy as a whole,” he says.
Dr. Roger Barker, director of policy at the Institute of Directors (a member of the Good Business Payments Organization), agrees that timely payments have a positive effect on the “supply chain and up and down.”
“All businesses must play their part in improving this problem for the betterment of the wider economy, especially as we rebuild in this post-quaid world.”