Supplier payment terms fluctuate wildly

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The impact of the coronavirus pandemic on the payment habits of B2B suppliers has created two extremes.

At one end of the spectrum, retailers like apparel companies are dramatically reducing orders and extending payment terms, or even canceling payments altogether.

“The majority of major retailers are extending payment terms and there are many cancellations, even of orders in progress,” British Fashion and Textiles Association chairman Nigel Lugg said in an interview with the Financial. Times. “Terms are regularly increased from 60 days to 120 or even 150 days…this could eliminate a lot of suppliers.”

The other end of the spectrum is a bit brighter. A recent report from Creditsafe indicates that supermarkets have largely accelerated their supplier payment practices in an effort to promote the financial health of their supply chains.

Creditsafe CEO Matthew Debbage pointed to Walmart’s recent initiative for prompt supplier payments, a “trend evident across the industry”, he said.

“This is incredible news, not just for the vendors, but in how it impacts the wider community,” he added.

Below, PYMNTS collates data on the evolution of vendor payment models across the spectrum, from five-day payments to terms of up to 180 days.

, according to a recent Creditsafe analysis, with researchers noting that this trend of paying sellers faster is accelerating in the grocery space. Companies such as Stop & Shop, Trader Joe’s, Winco, Publix Supermarkets and Walmart reflect recent industry efforts to ensure suppliers are paid on time, with average payments being made around five days after terms ago. one year old.

Five-day payment terms for Bank of Ireland suppliers aim to help the FI’s supply chain manage cash flow. Business World said the bank typically pays suppliers within 30 days, but five-day payments would help strengthen suppliers’ finances. The initiative will last until June, according to reports, and will target the bank’s range of small business providers in technology, advertising and recruitment services.

Six-figure balances on invoices will not be paid by luxury yacht company Sunseeker, according to new reports from Bournemouth Echo, with the British company announcing that it will delay payments to its suppliers due to the coronavirus. A supplier told the publication the decision came as a ‘shock’ from an international company, which also announced it would halt boat production and freeze supplier payments until ‘business as usual’ returns. .

Seven-day payment terms are the new normal for Australia’s BHP Petroleum, the company recently announced as the oil company moved to bolster its supplier base. Accelerated payment terms will last for the next six months for small suppliers and local businesses, the company said, RigZone reported, with the arrangement affecting more than 200 suppliers. According to BHP, it spends more than $150 million each year on supplier payments in the United States, Canada, Mexico and Trinidad and Tobago.

45-day payment terms are now imposed on Flight Center suppliers, according to The Australian, which reported that the travel company was struggling to protect its finances amid domestic and global travel restrictions. The expansion of Flight Center supplier payment follows action by Just Group, which now pays its suppliers in 180 days, as well as Sussan, a clothing company which has extended its payment terms to 90 days.

50% price cuts demanded by Western clothing retailers from their Bangladeshi vendors, according to recent reports, many garment buyers are also delaying payment from these vendors. Bangladesh is the second largest apparel supplier to Western countries after China, and the apparel supplier arena is now appealing to these corporate buyers to support the supply chain with timely payments and pricing. fair.

208% more invoices were submitted for financing on Taulia in March, the company revealed, noting that more than $4 billion in invoices were funded last month compared to the previous month. This increase reflects the growing demand for capital from suppliers who use their unpaid invoices to obtain financing. Taulia surveyed nearly 20,000 suppliers and found that a third of them say they submit their invoice for early payment because of their desire to manage their cash flow, while 20% say the motivation was payment predictability. .

£20,000 transaction limits on UK government acquisition cards set to be renegotiated, advised the Cabinet Office, noting that government entities should work with their card issuers to increase monthly limits in order to pay more public providers more quickly. The advisory also encourages government entities to make arrangements to ensure that as many staff as possible can use p-cards to support timely vendor payments.

$580 Billion in Accounts Receivable (AR) Financing Could Support U.S. Small and Medium Enterprises (SMEs), according to a letter recently sent to the Federal Reserve Bank by alternative lending platform SMB C2FO. The company announced its call for a new small business relief program aimed at turning AR into capital for small businesses that are still waiting to be paid by their big buyers. Dubbed the Small Business Supplier Protection Plan, the proposal aims to inject capital into SMEs without forcing companies to borrow money.

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NEW PYMNTS DATA: 70% OF BNPL USERS USE BANK PAYMENT OPTIONS, IF AVAILABLE

On: Seventy percent of BNPL users say they would prefer to use the installment plans offered by their banks – if only they were made available. PYMNTS’ Banking On Buy Now, Pay Later: Installment Payments and the Untapped Opportunity of FIs, surveyed more than 2,200 U.S. consumers to better understand how consumers view banks as BNPL providers in a sea of ​​BNPL pure-players.

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