Why is the supply chain affecting late payments?

Sidetrade, a fintech software supplier to businesses, launched the timely Sidetrade Unpaid Invoice Tracker in January 2020. Since then, it has been tracking the level of unpaid invoices across multiple countries and individual sectors. It displays some interesting insights and positively, unpaid invoices (10+ days late)  across the UK have dropped by 22% since the start of the pandemic. The data comes from the analysis of over 162m B2B invoices, worth over €300bn from 8.6 organisations across France, UK, Spain, Italy, Belgium, the Netherlands and the USA. But, the insights aren’t looking quite so rosy for the retail sector, and it’s being blamed on supply chain issues. So, why is the supply chain affecting late payments?

Some might say that the last 18 months have offered a perfect storm of issues that have all been impacting retail supply chains. If we look back to January 2020, the UK officially left the EU and the knock-on effect was felt, particularly when it comes to hauliers and warehouse workers. By March 2021, 1.3 million foreign workers left the U.K. and have yet to return since the end of national lockdowns and there has been a lack of British workers filling these positions. As a result, wages were pushed up and squeezed profit margins for many retailers.

In conjunction with Brexit, we of course then faced a global pandemic. Ports were left gridlocked due to a lack of retail activity and the haulier industry suffered when 40,000 HGV tests had to be put on hold to comply with lockdown restrictions. The lack of movement of goods placed huge pressure on all aspects of the retail supply chain.

The lockdowns also meant many non-essential retailers closed the doors, some were able to move to online marketplaces but some were unable to trade at all. And once lockdowns came to an end, staff were in short supply due to a multitude of factors including the enforcement of self-isolation in positive COVID cases or via NHS Test and Trace to help curb the transmission of the virus.

Then, almost a year after the global pandemic was declared, the Suez Canal became blocked by a 20,000 TEU container ship, the Ever Given. Ports that were already under stress became even more blocked as ships were unable to complete their intended sailings due to the blockage, particularly for trade between Europe, Asia and the Middle East. It was estimated that the value of goods held up by the blocked passage was US$9bn and an alternative round around the Cape of Good Hope in Africa would add an additional two weeks onto journeys.

And, as if all of this wasn’t enough, the UK then faced a petrol shortage crisis in September 2021. Panic buying began and many petrol stations were out of fuel as a result of the lack of HGV drivers to transport petrol across the country. The South East of England was affected by the shortage the most and on 27th September, Reuters reported that 50-90% of the UK’s petrol stations were dry.

So, as you can see, it’s been a particularly difficult time for the supply chain, not just in the UK but across the globe, with the retail sector suffering. But how is the supply chain affecting late payments? Well, as we’ve already mentioned, retailer profit margins are being squeezed, and each hurdle that has cropped up over the last 18 months has been a big blow for the retail industry. Sidetrade reports that almost 25% of invoices within the UK’s retail industry are classed as overdue for October 2021, a record high since the Unpaid Invoice Tracker began in January 2020. This is an increase from 12.5% in the same period last year.

All of the factors above are contributing to a difficult financial year for the retail industry, making forecasting difficult and rising prices across the supply chain and workforce, coupled with inflation and rising energy costs have been decimating cash flow and ultimately seeing businesses struggling to make payments on time.

We specialise in helping businesses to recover monies owed to them, in the most difficult and delicate of circumstances and we’re ready to help you. We take on cases in their entirety, making contact with debtors, negotiating, escalating if necessary, and managing payments and payment plans. So, if you’re finding yourself facing late payments, in any sector not just retail, then reach out to us and have a non-obligatory discussion about the debts owed to your business. And don’t forget, we operate on a no collection, no fee basis – so you really have nothing to lose.