Do you have unpaid invoices? Read on!
Imagine this: your business is a sleek, high-performance vehicle, ready to race towards growth and success. But there’s a catch—unpaid invoices are like handbrakes left frustratingly engaged, holding you back from reaching your true speed.
With B2B transactions, these unpaid invoices aren’t just minor irritants. They’re formidable obstacles to your company’s financial agility and operational efficiency.
As more businesses seek to reach the potential of their financial journeys, the spotlight turns to innovative solutions like B2B Buy Now, Pay Later (BNPL) options. These aren’t just trendy financial tools; they’re B2B lifelines thrown to companies who may be drowning in a sea of delayed payments.
Unpaid invoice wake-up call
A few stats about unpaid invoices show the pain this issue causes:
From Atradius Payment Practices Barometer for Europe 2023:
- Late Payments: The report shows that late payments from B2B customers affected 62% of the businesses in Europe, indicating a significant impact on the cash flow of companies.
- Payment Duration: On average, it takes up to 43 days for businesses to receive payments from their B2B customers, a slight increase from the previous year.
- Industry-Specific Data: The Construction and Manufacturing sectors were among the most affected by late payments, largely due to the pandemic’s lingering effects and supply chain disruptions.
And, from the European Commission:
- Late payments or no payments: ‘In the EU, on average, one out of two invoices in commercial transactions are paid late (or not at all) … SMEs, who rely on regular and predictable streams of cash to operate, are more vulnerable to the risk of being paid late and to its damaging effects.’
- Impactful cost reduction: ‘A one-day reduction in payment delays would increase EU companies’ aggregated cash flow by 0.9% and could save them €158 million in financing costs.’ – Imagine the savings if invoices were paid as soon as an SME delivers!
The Fintech Times points out (for the UK):
- 55% of UK SMEs had outstanding invoices in the 2022/23 tax year,
- 35% of unpaid invoices are less than 1 month overdue
- 27% are between 1 and 3 months overdue
- 20% are between 4 and 6 months overdue
- 18% are over half a year overdue
Problems B2B Businesses Have With Unpaid Invoices
Unpaid invoices are more than just an administrative nuisance; they’re a significant barrier to growth, efficiency, and financial health for B2B businesses. Delays in payments can ripple through a company’s operations, affecting everything from cash flow to client relationships.
So, before looking at how B2B BNPL payment solutions might help, let’s take a closer look at the typical problems caused by unpaid invoices in the B2B sector.
Cash flow disruptions
The most immediate impact of unpaid invoices is on cash flow. Businesses rely on a steady stream of income to cover expenses, reinvest, and grow. When payments are delayed, it can create significant financial strain, making it difficult to manage day-to-day operations and plan for the future.
Administrative burden
Chasing down unpaid invoices is a time-consuming process. It diverts valuable resources and energy away from productive activities, into the endless cycle of follow-ups and negotiations with late-paying clients. This administrative headache is not just frustrating; it’s costly.
Damaged supplier relationships
Cash flow interruptions don’t just affect your business; they also impact your ability to pay your suppliers on time. This can strain relationships, potentially leading to less favorable terms or even a reluctance to do business with you in the future.
Hindered growth opportunities
When capital is tied up in unpaid invoices, it limits a business’s ability to invest in new opportunities. Whether it’s expanding into new markets, investing in research and development, or hiring additional staff, delayed payments can put a pause on growth initiatives.
Creditworthiness concerns
Consistent cash flow issues can affect your business’s credit score, making it harder to secure loans or lines of credit. This can have long-term implications, limiting your financial flexibility and options for expansion.
Increased financial risks
Unpaid invoices increase the risk of bad debt, where the likelihood of ever receiving payment significantly diminishes over time. This not only affects financial projections but can also lead to write-offs that impact your bottom line.
How a B2B BNPL service solves your unpaid invoice issue
The challenges posed by unpaid invoices are significant, but they are not insurmountable. By recognising these issues, businesses can take proactive steps to mitigate their impact.
Strategies such as implementing stricter payment terms, utilising invoice management software, or exploring B2B payment solutions like BNPL can transform how your business handles transactions, leading to improved cash flow, stronger relationships, and a more stable financial foundation.
Here’s why transitioning to a B2B BNPL solution could be the best move for your business.
Streamlined cash flow management
Unpaid invoices can significantly impact your business’s cash flow, delaying potential reinvestment or necessary expenses. B2B BNPL solutions, however, offer a more predictable and steady cash flow, ensuring businesses have access to the funds they need when they need them.
Enhanced buyer-seller relationships
The traditional invoicing process can sometimes strain relationships between buyers and sellers due to late payments or inflexible payment terms. B2B BNPL solutions introduce a level of flexibility and trust, fostering stronger relationships and encouraging repeat business.
Improved financial planning
With BNPL, businesses can better manage their budget and plan their finances without worrying about large, one-off payments. This flexibility allows for more strategic investment and operational decisions, enhancing overall business growth.
Access to a wider market
BNPL solutions can make your products or services more accessible to a broader range of businesses, especially those that might not have the upfront capital to invest in your offerings otherwise. This accessibility can lead to increased sales and market expansion.
Competitive advantage
Offering BNPL as a payment option can differentiate your marketplace – or your company as a merchant – from competitors who only offer traditional payment methods. This edge can be particularly appealing in industries where cash flow management is a significant concern for customers.
Leveraging technology for efficiency
B2B BNPL solutions often come with technological advantages, such as automated billing and payment tracking, reducing administrative burden and minimising the risk of human error. This efficiency can save businesses time and money, allowing them to focus on core activities.
Update your payments service with Terms.Tech’s BNPL offer
Financial agility and strong business relationships are key, and in that context B2B BNPL solutions offer a compelling alternative to the outdated process of juggling unpaid invoices.
By embracing BNPL, B2B merchants and marketplaces can enjoy improved cash flow, stronger partnerships, and greater financial control. They can position themselves for success in today’s competitive market while providing their customers with a way to more effectively manage their own cash flow.
Prevent unpaid invoices ASAP
Terms.Tech is ready to help you leave unpaid invoices in the past and get paid when you delivery. Improve your cash flow now, by contacting us today!
