Late payments are a problem impacting businesses globally. The World Bank predicts that late payments cost the global economy over $40 billion every year.
The challenges faced by businesses in response to late payments are only heightened by challenging economic conditions. During the COVID-19 pandemic and ensuing recession, 40% of businesses saw worsening late payments (Barclays) and corporate insolvencies doubled (RSM). In light of these difficult times, it is more important than ever for businesses to take stock of the late payment challenges they are facing and adopt practical solutions to reduce them.
This report assesses the current global severity of late payments, how they can be reduced, and what methods businesses have implemented to deal with them.
Overdue invoices represent a critical issue for small and mid-sized businesses' growth. 89% of business leaders believe late payments are hindering their business’ growth (QuickBooks) due to the strain and uncertainty they create for cash flow.
Not only do late payments restrict business growth, but for smaller businesses, they often lead to business failure. In the UK alone, 50,000 small businesses go into liquidation every year due to late payments (FSB). In addition, late payments pose a significant time cost for businesses, wasting a predicted 56.4 million hours per year (QuickBooks).
Healthy cash flow is essential to sustaining business growth during times of macroeconomic difficulty. With the looming threat of a global economic recession, small and medium businesses are at risk of worsening late payments and insolvencies.
The 2022 late payments report was conducted on finance professionals and accountants at businesses around the globe to understand the current climate of late payments, the impact of late payments on businesses, and the methods and accounts receivable processes that have been implemented to reduce them.
The report provides insights into