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The Global Impact of Late Payments (And What You Can Do About It)
Uncertainty has returned to the global economy, and it’s no surprise that finance and procurement professionals are facing unprecedented challenges. A recent survey by Taulia, representing 129 countries and incorporating data from over 9,000 businesses, has shed new light on a pressing issue: late payments.
The findings are stark. Over half (51%) of suppliers reported that their buyers pay invoices more than 30 days late, with 7% waiting more than 45 days for payment. This is a significant increase from the 34% reported in 2020. The consequences of this delay cannot be overstated.
**The Global Impact of Late Payments**
Late payments have far-reaching and devastating effects on businesses:
1. **Cashflow Crunch**: Missed or delayed payments can lead to cash flow shortages, making it difficult for suppliers to restock inventory, cover operational expenses, payroll, or service debts. In extreme cases, this uncertainty can cause small businesses to struggle or even close.
2. **Strained Business Relationships**: Repeated late payments damage a buyer’s credibility, causing suppliers to become hesitant to enter into future agreements or enforcing stricter terms. This can lead to strained relationships and, ultimately, a breakdown in trust.
3. **Supply Chain Disruptions**: Suppliers experiencing financial strain due to unpaid invoices may struggle to fulfill orders, resulting in delays further up the supply chain, production slowdowns, and shortages.
In response to these cash flow pressures, more suppliers are turning to early payments as a means of unlocking liquidity. In fact, nearly two-thirds (63%) of respondents expressed interest in taking early payments, with 22% already using this strategy as an external capital source.
**The Benefits of Early Payments**
Early payments offer several benefits:
1. **Access to Liquidity without Debt**: By accessing cash earlier, businesses can maintain a healthy balance sheet and avoid adding liabilities.
2. **Bridging Cash Flow Gaps**: Early payments provide a way to smooth out revenue fluctuations and anticipate incoming funds.
3. **Greater Predictability**: This approach allows for better management of collections and improved forecasting, enabling businesses to manage their financial resources more effectively.
4. **Stronger Buyer Relationships**: Early payments can be seen as a way to build trust and collaboration with customers, fostering stronger business relationships.
As the economic outlook shifts and uncertainty increases, it’s essential for businesses to maintain a healthy balance sheet and prioritize cash flow management. This includes exploring alternative means of accessing funds when needed. By adopting innovative technologies that provide accurate insights into risks and opportunities, businesses can respond more effectively to market changes.
**Conclusion**
In conclusion, late payments have far-reaching consequences for businesses worldwide. It is crucial for finance and procurement professionals to address this issue by seeking alternative solutions to maintain a healthy cash flow and liquidity. In these uncertain times, finding ways to bridge financial gaps and unlock working capital has never been more critical.
Sources:
* Taulia’s annual supplier survey
* Research commissioned by SAP
**Editorial Standards**
This article is based on editorial standards and practices.
Source: https://www.forbes.com/sites/sap/2025/04/29/the-global-impact-of-late-payments-and-what-you-can-do-about-it/
