• FREE RESOURCES
        • Accounts Payable
          Finally! The trick to securing greater T&E compliance
          Benefits
          Rooting out folks who don’t belong on your health plan: A 6-point dependent audit checklist
          IT
          3 costly misconceptions about biz email compromise
          Credit and Collections
          Collecting via email: 4 must-make moves in your subject line
          Accounts Payable
          5 Tough-to-spot signs that an invoice is fake
  • PREMIUM CONTENT
        • Staff management
          120 Proven Communications Tips for Today’s CFO
        • Payroll
          Handling Nonexempt Employee Pay: Stay Compliant and Avoid DOL Audits
          Accounts Payable
          T&E Best Practices: Complete Guide to Ensure Compliance
          Payroll
          Payroll Best Practices: 4 Ways to Save Time and Money
        • Staff management
          Email Best Practices: A 6-Question Quiz
          Staff management
          Innovative Communications Strategies: An Email Case Study
          Staff management
          A 5-part Framework for Successful Workplace Communications
        • SEE MORE
          PREMIUM RESOURCES
  • CORONAVIRUS RESOURCES
  • LOG IN
  • SIGN UP FOR FREE

Resourceful Finance Pro

  • FREE RESOURCES
        • Accounts Payable
          Finally! The trick to securing greater T&E compliance
          Benefits
          Rooting out folks who don’t belong on your health plan: A 6-point dependent audit checklist
          IT
          3 costly misconceptions about biz email compromise
          Credit and Collections
          Collecting via email: 4 must-make moves in your subject line
          Accounts Payable
          5 Tough-to-spot signs that an invoice is fake
  • PREMIUM CONTENT
        • Staff management
          120 Proven Communications Tips for Today’s CFO
        • Payroll
          Handling Nonexempt Employee Pay: Stay Compliant and Avoid DOL Audits
          Accounts Payable
          T&E Best Practices: Complete Guide to Ensure Compliance
          Payroll
          Payroll Best Practices: 4 Ways to Save Time and Money
        • Staff management
          Email Best Practices: A 6-Question Quiz
          Staff management
          Innovative Communications Strategies: An Email Case Study
          Staff management
          A 5-part Framework for Successful Workplace Communications
        • SEE MORE
          PREMIUM RESOURCES
  • CORONAVIRUS RESOURCES
  • Accounts Payable
  • Credit and Collections
  • Payroll
  • Accounting
  • Benefits
  • Finance Technology
  • Sales & Use Tax
  • More
    • Employment Law
    • Strategy
    • Policy and Culture
    • Fraud
    • Budgeting and Forecasting
    • Banking
    • Staff Management
    • Cost Control
  • Credit and Collections
2 minute read

They’re late to pay again – and it’s liable to hurt cash flow for many in 2023

Scott Ball
by Scott Ball
January 24, 2023
  • SHARE ON

The start of the new year looks a lot like what we saw over 2022: Businesses are struggling to pay their bills.

Late payments are higher than normal and it’s creating a challenge for Accounts Receivable and credit departments everywhere.

Thirty-nine percent of credit managers say the No. 1 reason customers are stretching payments further than the norm is due to inability to pay, according to the National Association of Credit Management (NACM). Credit managers shared their experiences and frustrations on the latest episode of the NACM podcast Extra Credit:

“Some customers’ mentality is they don’t pay until they’ve been paid. … The demand for their products is down, and cash flow is tight. The customers in this sector [coal, energy] are experiencing negative growth in some cases.”

Where you rank on a past-due account’s pecking order is increasingly important. “It’s like the old saying, ‘robbing Peter to pay Paul.’ They’ll pay their top supplier first and so on down the line. If you’re their 3rd most important supplier, then you’re 3rd to get paid. It’s what we’re seeing.”

Following up with customers who are past due sooner than later matters. NACM notes the majority of A/R and credit departments take between five to seven days to follow up with a client who hasn’t paid. The outliers are crews that take action in three days or sooner, and those who are as late as 15 days.

“We’re on the phone within four days, but still we can get stalled. For example, we call a customer and it says, ‘we don’t have the invoice yet. Can you send it?'”

Getting past the ‘check’s in the mail’ excuses

There’s no cure-all for the timeless problem of late pays. One idea is to give customers what they want. When it comes to making regulator B2B purchases, customers say their preference is bank-to-bank payments followed by corporate credit cards.

Yet for more than a third of U.S. companies’ credit departments, checks are still among the most common or the only payment method used. And for a customer that’s trying to stretch payment as far as possible, it can do so most effectively by delaying to send a check.

To prevent “the check is in the mail” tactics, A/R can insist on card or bank-to-bank payments with newer customers or clients who’ve been late to pay in the past. This can involve adapting how a credit team operates, but it may be the only option to keep cash flowing in what’s looking like a very rocky year ahead.

Scott Ball
Scott Ball
Scott Ball is a Senior Staff Writer for Resourceful Finance Pro with more than 20 years of experience writing for business professionals. He wrote for the trade publications CFO & Controller Alert, Facility Manager's Alert and Environmental Compliance Alert.

Get the

Resourceful Finance Pro Logo

Newsletter

With Resourceful Finance Pro arriving in your inbox, you will never miss critical stories on accounting, benefits, payroll & employment law strategies.

  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • Hidden
  • This field is for validation purposes and should be left unchanged.
Resourceful Finance Pro Logo
  • ABOUT
  • CONTACT
  • WRITE FOR US
  • ADVERTISE WITH US
  • Accounting
  • Benefits
  • Payroll
  • Policy and Culture
  • Employment Law
  • Fraud
  • Finance Technology
  • Sales & Use Tax
  • Accounts Payable
  • Credit and Collections
  • Strategy
  • Budgeting and Forecasting
  • Banking
  • Staff Management
  • Cost Control

Resourceful Finance Pro, part of the SuccessFuel Network, provides the latest Finance and employment law news for Finance professionals in the trenches of small-to-medium-sized businesses. Rather than simply regurgitating the day's headlines, Resourceful Finance Pro delivers actionable insights, helping Finance execs understand what Finance trends mean to their business.

Privacy Policy | Terms of Service
Copyright © 2023 SuccessFuel

WELCOME BACK!

Enter your username and password below to log in

Forget Your Username or Password?

Reset Password

Lost your password? Please enter your username or email address. You will receive a link to create a new password via email.

Log In

During your free trial, you can cancel at any time with a single click on your “Account” page.  It’s that easy.

preloader