The State of B2B Payments: Over Half of Invoices Paid Late

Payments
04.09.2024 08:55 am

Upflow, the accounts receivable technology platform, has released an in-depth report on the current state of B2B payments.

The report shines a light on business payment behaviours, analysing how various sectors are invoicing, what they’re typically owed, and how long it takes for their invoices to be paid.

The report includes actionable advice from this data, aimed to help business leaders tighten up their payment processes and ultimately cut down on cash flow problems that could negatively affect their business.

How often are our invoices paid late?

The average percentage of late payments for invoices stands at 57% across all the industries we analysed - meaning over half of businesses are experiencing payment delays, highlighting a pervasive issue impacting cash flow and operational efficiency across multiple sectors.

Sector	Percentage of late invoices
Office & Facilities Management	77%
Security, Compliance & Identity	73%
Finance, Insurance & Banking	69%
Backoffice, Operations & Productivity	66%
Research, Data & Intelligence	63%
Human Resources	61%
Cloud, Network & IT Infrastructure	59%
Real Estate & Construction	58%
Media & Publishing	54%
Healthcare	52%
Marketing & Advertising	49%
Consumer Packaged Goods	48%
Transportation & Logistics	46%
Manufacturing & Supply Chain	41%
Sales & Customer Success	33%
Total Average	57%

How long do we have to wait for our invoices to be paid?

Throughout several industries, there is a worrying trend that if invoices are not paid on-time or within the first 30 days of becoming overdue, they have a high chance of still being outstanding 90+ days after the due date.

Sector	1-30 days late	31-60 days late	61-90 days late	90+ days late
Office & Facilities Management	6%	3%	2%	66%
Security, Compliance & Identity	9%	4%	0%	60%
Finance, Insurance & Banking	16%	5%	4%	44%
Backoffice, Operations & Productivity	16%	6%	4%	40%
Cloud, Network & IT Infrastructure	16%	3%	4%	36%
Human Resources	19%	6%	3%	33%
Research, Data & Intelligence	19%	9%	3%	32%
Real Estate & Construction	17%	6%	3%	32%
Marketing & Advertising	13%	5%	2%	29%
Media & Publishing	20%	5%	1%	28%
Consumer Packaged Goods	14%	5%	4%	25%
Healthcare	18%	8%	5%	21%
Transportation & Logistics	19%	5%	2%	20%
Manufacturing & Supply Chain	18%	5%	2%	16%
Sales & Customer Success	19%	4%	1%	9%
Total Average	16%	5%	3%	33%

How can businesses combat this?

These numbers make it clear that we need to find a way to solve this growing issue. On average, across different industries, 33% of overdue invoices are still unpaid even 90 days after they're due.

This puts a lot of pressure on businesses that rely on these payments to keep things running smoothly. Here are some ideas to help tackle late payments:

Stricter Payment Terms and Penalties

Companies should set up stronger payment terms with clear penalties for late payments, like charging late fees or interest. This encourages clients to pay on time.

Automated Payment Reminders

Using technology to automate payment reminders can help prevent invoices from being forgotten. These reminders can be sent before a payment is about to become overdue, keeping it fresh in the client’s mind.

Early Payment Discounts

Offering discounts for early payments can motivate clients to pay their invoices before the due date. This approach has worked well in various industries, helping to cut down on late payments.

Invoice Factoring

Businesses can consider invoice factoring, which involves selling unpaid invoices to a third party at a discount. This provides immediate cash flow, reducing the impact of late payments.

Better Communication and Relationships

Keeping an open line of communication with clients can help nip payment issues in the bud. Regular check-ins and honest conversations about payment expectations can make a big difference in getting invoices paid on time.

Legal Action for Repeat Offenders

For clients who are consistently late with payments, businesses might need to think about taking legal action as a last resort. This could mean taking the case to small claims court or hiring a collection agency to recover the debt.

These strategies can help businesses manage and reduce the impact of late payments, keeping their operations on track.

Commentary from Upflow CEO:

“What our report has outlined is that late payments are a significant issue across various industries, causing substantial cash flow challenges for businesses.
The data highlights that over half of invoices are paid late, with some sectors experiencing even higher rates of delay.
These insights underscore the urgent need for businesses to adopt more robust payment processes. By addressing the root causes of payment delays and implementing effective strategies, companies can improve their cash flow and overall financial health.
However, it's important to note that this is not a lost battle. Business leaders can take proactive steps to address these issues, as shown by the success of top quartile performers within our report.
These high-performing companies have demonstrated that adopting robust payment processes can significantly reduce payment delays compared to the average companies.
Our report offers actionable advice to help people navigate these challenges, ensuring that they can mitigate the risks associated with late payments and sustain their growth.”