That problem confronts businesses, including SMEs, in Australia as much as it does in many other countries, but one company - purchase-to-pay and e-invoicing solutions vendor Basware - has now teamed up with MasterCard to offer a solution which it says will help to break the ‘late payment culture’ now pervading business around the world.
The solution, Basware Pay, is designed to connect buyer and payment processes and enable working capital optimisation, allowing buyers to better manage their cash flow and allow suppliers to get paid sooner.
The launch of the Basware Pay solution comes on the back of research commissioned by Basware and MasterCard, and undertaken by Loudhouse, which the two companies say revealed that over half - or 57% - of international businesses surveyed admit to having actively delayed paying their suppliers in the past 12 months.
“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, Basware.
“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.”
With the new solution, Basware Pay extends the value of the purchase-to-pay process by providing what Tihilä says is a “unique, global e-payment solution”.
The solution connects buyers’ and suppliers’ payment processes through the Basware Commerce Network. Suppliers’ invoices are sent via the Basware Commerce Network, approved by the buyer and once approved become available for payment through a virtual MasterCard account number.
According to Tihilä, the supplier then receives an early payment while the buyer typically has extended payment terms. “Both parties benefit from richer settlement data and full process and payment visibility – leading to less chasing or being chased for payment.”
“More than ever, global businesses rely on a complex network of partners and suppliers, and the ability to interact with agility is key to taking advantage of a fast moving environment,” said Hany Fam, President, MasterCard Enterprise Partnerships.
“Integrating invoicing and payments processes can take friction out of the system and boost the broader economy. Combining MasterCard’s global network and innovative technology with Basware’s industry-leading purchase-to-pay platform has the potential to enable transformative change.”
Over 1,000 strategic decision makers across Australia, Europe and the US participated in the joint Basware MasterCard “Creating Payment Energy” research, which Tihilä said highlighted the tension between cash management and efficient payment processes.
Some of the top findings were:
• 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%) of decision makers 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 that they have used payment terms as a strategic lever to help manage cash flow
• Only one in four businesses has highly automated processes to manage payment efficiently.