This seems like an obvious answer, but Australia’s late payment culture
(https://bit.ly/3fAsUVt) suggests otherwise. Xero confirmed that 53% of businesses paid their invoices late, putting pressure on vendors who also need to pay their staff and vendors, with 25% of businesses admitting to difficulties in meeting tax obligations whilst 20% being unable to expand their business or even take on additional work.
If we put this in the context of an employee (vendor) and employer (customer) relationship, the consequence of a 1-2 day delay in wage payment to an employee is dire. Relationships strain, trust broken and puts pressure on their ability to meet personal obligations (e.g. mortgage repayments). These similar pressures are experienced by vendors.
Good relationships are the basis of good business. and good relationships occur where both parties are accountable to each other. The trick is making accountability easy so it becomes effortless. Accountability in its simplest form, is to adhere to performance under contract and pay invoices in accordance with agreed terms.
Vendors have responded by devoting teams and technology to chase payments and offer online payment options (Prushka report indicated 50% of businesses surveyed stated asking twice for payment was standard practice, while 35% stated asking 2 to 4 times had become common practice). Whilst these have a varying degree of success, the need to chase payment should not exist.
However, forward thinking suppliers have “gone back to the future”, using incentives such as early payment discounts to encourage early or on time payments. Instead of giving discounts at a product level (https://bit.ly/2ShISuV) they use technology to create automated early payment programs where discounts are taken at the payment level, creating a certified win-win for both parties.
Providing both sides with the opportunity to expand and build on good corporate citizenship, while keeping their cash at bank balance healthy.
Today, there is no shortage of technology to enable B2B payments to be automated, managed, recorded, along with the ability to settle early for discounts and rewards based on mutual consent. Making early and on time payment your goal is good for business and your bottomline. What’s stopping you?