The key to getting paid on time? Digitised payment processes
David Williams, Chief Financial Officer, Tungsten Network
In 2017, Tungsten Network spoke to more than 500 businesses across the world, and almost half (47 per cent) admitted that at least one in 10 payments to their suppliers are made after their agreed payment terms. Only 5 per cent said they always pay their suppliers in the time promised and one in 12 said they fail to monitor their payment practices altogether.
This late payment culture hits small businesses particularly hard because they don’t usually have the luxury of deep cash reserves. The key to change is understanding what lies at the heart of the problem. Historically, most people thought that late payment was due to companies holding on to their cash for as long as possible. However, Tungsten Network’s Friction Index, which looked at the causes of friction in supply chains, shed new light on the problem. Sixty-four per cent of businesses blamed slow internal processes; 39 per cent blamed lack of automation; 27 per cent administrative errors; 20 per cent team capacity to manage the volume and only 16 per cent referred to managing cash flow.
That’s why Tungsten Network is on a mission to educate businesses on how automation can eliminate so many P2P problems and facilitate timely payment. The benefits of digital automation are increasingly well-recognised in this day and age, where so much of our business and personal lives are digitised, so it seems almost prehistoric to have teams of people handling paper invoices and spending hours on the telephone responding to enquiries.
Tungsten Network believes that if e-invoicing were adopted by more organisations, many of the frictions that currently cause late payments would naturally evaporate, leaving leaders with more resources to seek out and identify opportunities for business improvement in this year and beyond.
Find out how much friction is in your payment process at www.frictionfinder.com