UK companies are struggling to process invoices in a timely manner, having a knock-on effect to the entire supply chain, according to research.
A report by Invu said almost a quarter (23%) of UK finance decision-makers at medium and large companies said it took more than 10 working days to process supplier invoices, with 29% of these saying it took longer than 20 working days. A further 7% were unable to identify how long it took.
The report said there had been a four percentage point drift towards poorer payment practices in the last 12 months, with 74% rating their business as excellent or good on paying invoices on time, compared to 78% a year ago.
The report, The Covid-19 stress test for business: an accelerator for change, also found 15% of respondents said their current purchasing process was “broken and needs fixing as a matter of priority”, while 35% said it could be improved. Only 46% said the process worked fine.
The research revealed 29% of respondents tended to put suppliers first, and they did not engage in competitive tendering for goods and services during the pandemic. Of these, 37% were prepared to take special measures to support supply chain in tough times.
Invu said the Covid-19 pandemic had shown how reliant businesses are on the goodwill of their supply chain, but warned any delays in processing invoices or poor payment practices could quickly put relationships under strain and could leave businesses battling for survival.
Ian Smith, general manager and finance director at Invu, said: “The need for real-time decision making based on reliable and timely data delivered from management reporting is critical for under-pressure business leaders who need to understand their liabilities and commitments.”
He added: “It’s not all doom and gloom however. Covid-19 has brought out the best in some companies. For example, Morrisons used £60m of its cash reserves to pay its suppliers quicker to ease the financial pressure in their supply chain. Credit must be given where it’s due.”
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