Businesses purposely delaying supplier payments - study

Companies admit to paying suppliers late to help manage cashflow

The majority of businesses have admitted to actively delaying paying their suppliers in the past 12 months, according to a new study.

Mastercard surveyed 1,000 companies across the US, Europe and Australia and found that three quarters of respondents said paying suppliers late was a "fact of business life", despite nearly all of them acknowledging that delayed payments have wider repercussions for businesses.

Over the past 12 months, 57 per cent of those questioned said they had purposefully delayed paying a supplier, which Mastercard said had far-reaching consequences.

"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," said Esa Tihilä, chief executive officer of Basware, which helped conduct the report.

More than two thirds of those asked admitted that paying suppliers late was a strategic move to help manage cashflow, and just a quarter of them said they have automated processes in place to manage efficient payments.

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