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iwocaPay: Levelling the ‘paying’ field

iwocaPay: Levelling the ‘paying’ field

Why fairer payment terms can kickstart the SME coronavirus recovery

Coronavirus has impacted every sector of the economy and its reverberation on small business has been dramatic. Between 23 March and 5 April 2020, a quarter of all UK businesses ceased trading, and over half of those that continued to trade saw a fall in turnover.

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Before the crisis began the small business B2B sector was already concerningly inefficient, and coronavirus is only making it worse. Lengthy payment terms consume time and resources, preventing suppliers from growing their businesses.

With 40% of suppliers owed over £10,000 in unpaid invoices, it’s not surprising that they’re looking to shorten their payment terms and reduce the risk of being owed more. At the same time, buyers whose companies have seen a significant drop in turnover are seeking longer terms that allow them more time to pay. With buyers and sellers pulling in opposite directions, a trade credit crunch seems increasingly likely.

“What’s emerging is a concerning game of ‘tug of war’ between small businesses as they look to survive and plan for the future,” says Christoph Rieche, co-founder and CEO of iwoca. “Buyers can’t pay their invoices because they don’t have the revenues, and sellers are being asked to provide longer payment terms to ease the strain whilst already sitting on a growing backlog of unpaid invoices.

“Coronavirus can and should help trigger a step-change for small businesses to become more efficient, productive and resilient. We believe the first and most obvious change is to make payment terms fairer between suppliers and customers.”

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Language

English

Pages

29

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