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Government intervention, such as the Prompt Payment Code of 2008 and the Duty to Report (DTR) regulation introduced in 2017, is doing little to curb this unfair practice.
The causes of late payments vary. For 35% of financial decision-makers, it’s a deliberate policy to protect their own liquidity and cash flow. When the blame is put on suppliers, 39% of decision-makers cite poor quality service, while 33% point to incorrect invoice details.
Firstly, be sure to follow all of the customer requirements for invoicing, such as quoting a purchase order number if this is mandatory, and send your invoice to the right email/postal address.
Cloud-based solutions enable you to keep tabs on your invoices electronically. For example, if you notice an invoice email has not been opened or downloaded, you can send automated, proactive reminders.
Offer immediate online payment options, such as a link where the invoice can be settled immediately by credit or debit card. Accounts payable and credit control teams attest to how effective this can be.
Accounts payable automation solutions make it easier to process and approve your own invoices more quickly. Efficient, timely invoice approval creates opportunities for businesses to partner with finance providers to put in place early payment programmes.
Such collaboration means payers can meet their own objective of not paying cash too early and minimizing the use of overdraft facilities. At the same time, it helps suppliers improve their inbound cashflow and get paid more quickly.
Indeed, developing strong commercial supplier relationships could lead to competitive advantages. It places good payers in a better position to negotiate contracts with trading partners and create relationships that allow for more accurate cash forecasting on both sides.
Recent research by Bottomline into the thorny area of late payments shows that 92% of financial decision-makers admit to having paid suppliers late. Sadly, it is not a new trend. If you understand more about the reasons why payments are often late, then you can adopt some effective strategies to help stamp out unnecessary late payments.
Until you receive money from a sale then you are at risk of late or non-payment, making it tough for you to manage cash flow. Read our guide to learn more about getting paid and finding the best payment method for you and your customers.
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