Cash flow problems of B2B payments | RBS Invoice Finance

The enduring cash flow problems of B2B payments


B2B commerce is estimated to be worth around $1 trillion by 2020 in the United States alone. But an outdated payments culture of paper invoices and manual processing puts many businesses at risk, according to a report by bobsguide.

The main areas of concern for businesses suffering from late payments include a rise in cheque fraud, delays in invoice payments and the complexities involved in cross-border payments.

According to a survey by the Association for Finance Professionals (AFP) and JP Morgan, 62% of businesses had experienced fraud in 2014/15, with cheque fraud accounting for 77% of the total. Cheques still make up 50% of B2B payments in the United States.

A lack of cash flow is particularly dangerous for small businesses. A survey for Coface showed that 80% had experienced late payments in 2015, with 10% responding that they had waited an average of more than 150 days for invoices to be paid.

These problems have increased the demand for invoice financing options. A report for the UK’s Asset Based Finance Association (ABFA) recently showed that the number of large businesses using invoice financing had increased by 25%, from 713 companies in 2014 to 893 in 2015.

The same study showed that 80% of all asset-based financing was secured against unpaid invoices, while the remaining 20% was provided against assets such as debt, inventory, property and machinery.

This, says the report by bobsguide, is helping to drive innovation in the UK by freeing up cashflow in both small and large businesses, enabling them to easily meet upticks in customer demand.

For more news, views and reviews on funding and support for the UK technology and recruitment sectors follow us on Twitter @RBSIF.

 

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