Mastercard and Basware – Exploring Payments and Discounting (Late Payment Impacts)

The Spend Matters team recently sat down to digest a very comprehensive study, Creating Payment Energy – Unlocking the Value of B2B Payment Networks, (n=1,000+) conducted by MasterCard and Basware on the topic of payments from both an AR and AP perspective (see our background coverage on the study here). As our analysis of the research continues today, we will turn our attention to the impact of persistent late invoice payments.

The widest spread impact of persistent late payments between buyers and suppliers should come as no surprise – limited the “flow of funds” between both parties (selected by 45 percent of respondents). More interesting are other impacts including “limit[ing] flow of funds between employers and workers,” which 40 percent of respondents noted, and “limit[ing] the flow of funds between companies and investors” which 37 percent of those participating noted as well. Much further down the list were “limiting employment/jobs” at 13 percent and “increased taxes” at 2 percent.

Spend Matters analysis of this data suggests that, based on much of the survey sample size coming from the SMB market, the degree to which persistent late payments directly impact workers at suppliers (and potentially drive supply risk as a result) is much higher than we would have imagined. The linkage is actually a bit frightening – by delaying payments, larger organizations (in most cases, buying organizations are larger, although not always) are impacting stability in the workforce. It’s likely that a sample size focused on larger companies might have skewed the responses to a lower percentage in this area.

Still, it’s a fascinating finding. As our analysis of the Mastercard and Basware research continues, we will turn our attention to some of the challenges associated with driving on-time payments as well as effective discounting programs.

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