Since the first quarter of 2020, the COVID-19 pandemic has significantly impacted invoice payments across the world. Experts believe that international invoice payments are often caught in the cobweb of complications.
Before the outbreak crisis, there were broad differences in late invoice payment trends and practices. Different markets had different reasons for late payments. The initial reaction of COVID-19 had predicted even more dire consequences for invoice payments.
The worst of the pandemic may be over, but many economies worldwide continue to bear the heavy burden of overdue invoices.
In the US, the Q1 of 2020 showed a slight reduction in punctual invoice payments.
On average, the punctual payments were reduced by 0.7%, whereas late invoice payments over 90 days were increased by 0.1%.
Overall, the on-time invoice payments stood at 54.2% in 2020, whereas severely late payments over 90 days were 2.9%.
By the end of 2019, the punctual invoice payments rate was 54.9%.
But it dropped down to 54.2% by the end of June 2020.
But this percentage gap rose to 2.9% by December 2020.
Predominantly, some specific industries took more major blows when it comes to late invoice payments.
Specifically, the decline in punctual payments was high in passenger transit, automotive sector, coal mining, retail sector, and other service industries worldwide.
In UK, punctual invoice payments also showed a moderate decline in the first half of 2020.
However, the on-time payments started to fall with more speed in the US by the end of 2020.
The total percentage of firms making punctual payments decreased from 43.8% to 41.5% in 2020.
This 2.3% decline in invoice payments had a significant impact on small and medium-sized businesses in the United States.
In Europe, however, the UK is one of the top three worst players for late invoice payments.
Although the UK’s current decline in punctual payments stands at 3.8%, the pre-pandemic rate stood at 3.7%.
Fortunately, most North and South European countries seem to be recovering on-time punctual invoice payments in the post-COVID-19 era.
Despite the unprecedented pandemic crisis, there has been diversity in payment trends.
Many regions and markets reacted to the pandemic with different types of credit payment situations. However, domestic patterns, business culture, and industrial attributes led to diverse and complicated payment trends.
Most of the payment patterns, however, have been changing since the start of the pandemic. The defiance of traditional payment wisdom still stands, impacting a country’s ability to collect invoice payments on time.
The plunge set forth in motion by global lockdown has been somewhat over. However, it will take some time before the global economy completely recovers.
According to macroeconomic forecasts, there will be a negative impact on invoice payments on time for a few years. With the rollout of vaccination, many European and Asian countries have started to reopen and reduce lockdown restrictions.
As the 2021 winter approaches, businesses don’t want to deal with another wave of restrictions and balance the punctual payment performance rate.
More businesses now wish to conduct credit reviews to protect their cash flow and manage contract breaches without delays. It seems to be the most effective way to avoid late invoice payments by suppliers and customers.