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Paying suppliers late now seen as normal business practice says MasterCard study

Published:  04 September, 2014

Paying suppliers late is now seen as part of normal business practice by many international companies, according to a new study.

Its findings will be felt across the wine and spirits industry where late payments, are seen as one of the key detriments to growth, particularly amongst small and medium-sized businesses.

The study, compiled by MasterCard and online payment specialists, Basware, claims a late payment culture is now embedded in many sectors with three out of four businesses surveyed saying they regarded it as "normal practice".

Over 1,000 businesses took part in the research across Europe, the US and Australia. It found that:

  • While the vast majority (88%) of respondents agree that suppliers should be paid promptly, over half (57%) admitted to having actively delayed payments in the past 12 months

  • Three quarters (74%) think late payment is a fact of business life and will always happen, despite 90% acknowledging that payment delays have wider repercussions for businesses, such as the ability to pay staff or reduce investment
  • Two-thirds (67%) acknowledged they have used payment terms as a strategic lever to help manage cash flow
  • Only one in four businesses have highly automated processes to manage payment efficiently.

Esa Tihilä, chief executive officer, of Basware said of the findings: "When three quarters of businesses have more than 50 suppliers and about two thirds send and receive more than 100 invoices a month,  a culture of late payments impacts individual organisations as well as the economy as a whole."

She added: "While a certain level of cash hoarding may be understandable given the financial climate, it also reflects inefficient processes and poor practices. Businesses have a responsibility to themselves and their supply chain to unlock value and keep money moving."

On the back of the research Basware and MasterCard have developed a new system, Basware Pay, that claims to connect and quicken buyer and supplier payment processes.