The global e-invoicing market is on its way to cross $24.7 billions by 2027.
Interestingly, the global e-invoicing market was $4.6 billion in 2018. This makes up for a nearly 80% increase. Focused research and data predict that the market will continue to grow with a 20.4% CAGR.
With the COVID-19 pandemic crisis, late invoices spiralled out of control in specific regions of the world. Whether it’s the UK, South Africa, US, France, or India, businesses want to process invoices faster. E-invoicing continues to face hardships due to COVID-19.
However, companies understand that avoiding late invoices is the most effective way to prevent issues later on. This report will outline the late invoice payments statistics through the lens of different countries and industries in the wake of COVID-19 crisis.
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Key takeaways and findings
Average rate of late invoice payments around the world
We need to bear in mind that many countries continue to crack down on late invoice culture. Today, many SMEs are forced to depend on shareholder’s capital or opt for an external debt finance solution.
Late payments cause a lot of business cash flow problems and stump growth, the last thing businesses want is to dive into the rabbit hole of late invoices.
It is important to understand that each country has its distinct local presence in the global marketplace, leading to varied reasons why invoices are not paid on time.
Over 90 Days Invoice Payments in December 2019 vs 2020
Changes in late invoice payments in 2019
| Countries | Over 90 Days Invoice Payments in December 2019 | Over 90 Days Invoice Payments in June 2020 |
|---|---|---|
| Russia | 5.2% | 6.2% |
| Poland | 2.7% | 4.5% |
| UK | 3.7% | 3.8% |
| Ireland | 1.6% | 1.5% |
| Netherlands | 0.6% | 0.4% |
| Luxembourg | 0.7% | 0.9% |
Many countries with late invoice remittance didn’t experience a lot of variations. Predominantly, Poland and Russia stand at the top with the biggest changes at +1.8% and +1%.
Invoice Payment Variations in North European Countries from December 2019 to June 2020:
| Countries | Over 90 Days Invoice Payments in December 2019 |
|---|---|
| Belgium | – 0.01% |
| Sweden | – 0.01% |
| Netherlands | – 0.02% |
| Germany | 0.0% |
| Denmark | 0.0% |
| Finland | 0.1% |
| UK | 0.1% |
| Ireland | 0.1% |
| Luxembourg | 0.2% |
| Russia | 1.0% |
| Poland | 1.8% |
When it comes to South European countries, Romania stands as the worst performer in late invoice payments with -6.9%.
Variation of other countries like France is -4.1%, Spain -2.6, and Slovenia -1.1%.
Many European experts believe that the variation in late invoices in South European countries is bound to increase over time.
In terms of late invoice payments over 90 days, the average percentage is higher by 2% in Slovenia.
There is also an increase of late payment of invoices of 0.6% and 0.3% in Bulgaria and Greece.
| Countries | Over 90 Days Invoice Payments in December 2019 | Over 90 Days Invoice Payments in June 2020 |
|---|---|---|
| Romania | 12.9% | 8.2% |
| Portugal | 11.6% | 9.6% |
| Greece | 9.0% | 9.3% |
| Croatia | 5.5% | 5.5% |
| Turkey | 7.9% | 6.1% |
| Italy | 3.0% | 3.3% |
| Spain | 3.2% | 3.3% |
| France | 3.2% | 3.3% |
| Serbia | 1.5% | 1.8% |
| Bulgaria | 1.2% | 1.8% |
| Hungary | 0.7% | 0.5% |
Over 90 Days Invoice Payments 2019 vs 2020
From India to South Africa: Countries with highest late payment invoices
From Finance to Healthcare: Late payment invoice statistics
In North Europe, the industries that took the heavy hit amidst the pandemic crisis include motion pictures, hotels, finance, healthcare, and transportation.
With the production of motion pictures shut down due to the pandemic, there was a steep decline in punctual payments.
With fears of virus transmission in the first quarter of 2020, interurban transit and oil/gas extraction sectors also significantly impacted.
In late 2020, the variation in late invoice payments in manufacturing and financial services had increased to 2.7% on a global scale.
On average, the water, electricity, and gas sector also showed a variation of 1.5% throughout the world.
Global increase of 2.7%
Small Businesses: Late payment invoice facts and figures
Thousands of small businesses in Europe, North America, South America, and Asia receive late invoice payments.
Statistically, 1 out of 10 SMBs receives late payments.
Similarly, more than 10% of invoice payments are considered bad debt or never paid at all.
In the United States, results point out an overall impact of overdue invoices on small businesses.
- Over 10% of late invoice payments are written off or considered as bad debt.
- Up to 30% of small and medium-sized businesses expect to face the negative impact of their late payments that may affect the company’s supplier, staff, and investments.
- On average, small businesses spend 15 days each year chasing late invoice payments.
- Around 13% of late invoice payments of small businesses are late.
The solution to reducing the time it takes to pay for debt owed in different industries and countries would be to establish universal payment terms and conditions upfront.
Also, it is important to spot and resolve barriers that lead to late invoice payments.
SMBs should also build solid supplier/customer relationships and use automation to boost punctual payments.
Essential reasons for late invoice payments
When businesses don’t receive punctual invoice payments, their workforce starts to chase late invoice payments in an endless loop. Most companies depend on invoice funds to run regular operations, pay suppliers and staff, and drive future growth.
Most businesses are befuddled and surprised not to receive invoice payments on time. Whether it’s an economic issue or a legal hurdle, late invoice payments can run due to various underlying reasons.
Cashflow Problems
The primary reason late invoice payments occur is because of cash flow issues. When businesses struggle with cash flow problems, it is crucial to communicate with customers and touch on reasoning. But businesses that convey this information usually offer a realistic payment plan as a goodwill gesture to customers.
Conversely, businesses often face challenging and unexpected seasonal changes. It may not be a viable strategy for firms to profess their cash flow issues to debtors, but failure to communicate usually leads to loss of credibility.
Unsatisfied Customers
Another reason for delayed invoice payments is that customers maybe not satisfied with the product or service businesses offer. In 2021, product or service dissatisfaction is more common than you think. Usually, it can lead to complications that may trigger unwillingness to pay from the debtor.
For instance, if a dedicated construction firm gets faulty or outdated goods, they will lose trust in their supplier. Eventually, this mistrust would put a crack on their entire business relationship.
But an efficient, smooth, and practical service ensures optimal cash flow and customer satisfaction that influences punctual invoice payments. Most businesses may not want to hear this, but bad customer relationships can lead to disastrous consequences and halt business growth altogether.
Passive Business Standards
In the digital age, many businesses are pretty laid back and await invoice payments from many debtors. From opportunistic debtors who take advantage of uncertain debtors concerned about an issue, invoice payment can get stuck. However, businesses that agree on mutual terms and conditions urge debtors to make punctual invoice payments and maintain healthy business relationships.
Covid-19 pandemic crisis and late payment invoice
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.
Methodology
The focus of the research was to analyse and compare late invoice payments of different countries and make contextual points. Also, the highlighted statistical figures represent global commercial transactions.
In total, around 38 countries were analysed and compared for late invoice payments:
US, UK, Turkey, Thailand, Taiwan, Sweden, Spain, South Africa, Slovenia, Singapore, Serbia, Russia, Romania, Portugal, Poland, Philippines, Netherlands, Mexico, Luxembourg, Italy, Israel, Ireland, India, Hungary, Hong Kong, Greece, Germany, France, Finland, Egypt, Denmark, Croatia, China, Canada, Bulgaria, and Belgium.
Conclusion
It is crucial to consider those different regions and markets worldwide had a different impact due to the COVID-19 pandemic.
Various scenarios are at play that slows down the invoice payments for small (and large) organisations. Apart from industrial characteristics and domestic patterns, businesses expect an optimistic change and a decrease in late invoice payments in the foreseeable future.
Although the spread of the COVID-19 virus is expected to slow down around the world, the macroeconomic forecasts suggest that negative invoice payments may continue for some time.
But by 2021, small businesses would have a more transparent picture assessment of their credit risk and will be able to stabilise their cash flow through punctual invoice payments.
In 2021-22, you can expect more small and mid-sized firms to roll out countermeasures to resolve suppliers’ and customers’ late payments and contract breaches.
NOTE:
The geographic segmentation and analysis of late invoice payments represent and cover a variety of commercial products and services around the world. Despite in-depth research and precautions to draft the report, the estimates, predictions, facts, and stated opinions are based on analysis that can be construed as reliable but not guaranteed.
About the Author: Thomas Minarik
