Want Faster Payments? Try Libeo, Your Fast-Paying B2B Solution

Financial Hurdles: Why Late Payments Remain the Doom of Small Businesses

The impact of late payments on small businesses

Research from Xero’s Small Business Insights has found that the UK’s small and medium-sized businesses are owed an average of £24,841 in late payments on any given day. Around half of invoices issued by small businesses are paid late, and 12% are paid more than a month after they were due. The worst affected sectors being:

1. Manufacturing (67%)
2. Professional, scientific and technical activities (65%)
3. Construction (64%)

Late payments cost small business owners £684m a year, with most receiving payment 5.8 days late on average, new research from ICAEW shows. Beyond financial issues, late payments can cause severe damage to the relationship between buyers and suppliers:

• 23% of UK businesses have experienced termination of goods or a relationship with a supplier because of late payments.
• 62% said paying suppliers late had significantly damaged relationships. 
• 67% feared a “global cashflow crisis” would occur if firms continue to pay late.

In addition to the direct impact on your cashflow, late payments can also have an adverse effect on your reputation and brand identity. This is especially true in the B2B environment where trust is paramount and relationships with suppliers are likely to be long-lasting.

Late payment legislation and fast payment systems such as CHAPS payment and Bacs payment are here to help businesses speed up their accounts payable processes. But companies often play down the impact of late payment on their business.

"Timely payments are critical to gain favor with suppliers, helping to open the door to better collaboration." Stephen Carter, director of payments strategy at Ivalua, says. But this is exactly where the problem lies; according to Xero Director of Operations (UK and EMEA) Kate Hayward, three-fourths of large organisations are aware that paying their small business suppliers late can hurt the supplier’s business, but 55% admit they have paid their small business suppliers later than the agreed payment terms in the last 12 months anyway.

What causes late payment to suppliers?

There are many reasons why businesses do not pay on time. In addition to bad faith and financial problems, the main causes of late payment are as follow:

• Incorrect invoices and delivery error
• Poor cash flow management
• Bad accounting practices
• Lack of time or resources dedicated to monitoring and claiming payments
• Lack of centralized information and lack of visibility on unpaid invoices

We must to emphasis this last point: research from Ivalua (a leading global spend management cloud provider) shows that a third of businesses surveyed reported a “severe lack of visibility” into payments, and 58% said there was little or no communication between procurement and finance teams, making it difficult to ensure suppliers are paid on time. On top of that, studies show that lack of visibility into payments increases the risk of fraud (64%), makes it harder to use payments strategically (50%) and hinders implementation of milestone or staged payments (47%).

Managing invoices together: How does Libeo make faster payments?

Nowadays, more and more small businesses and accounting firms rely on cloud-based solutions and automation to speed up their supplier payment process. One of the main reasons for this is that they want to spend less time on paperwork and more time on running their business.

This is where Libeo comes in. Libeo is a fully integrated and automated business-to-business payments platform, bridging the gap between invoices, payments, reconciliation and accounting. Our cloud-based invoice management solution helps you manage your invoices, payments and suppliers better than ever before. Here are some features of Libeo's online payment tool:

• Instant invoices collection and centralization
• Automated AP workflows
• Invoices approval circuits
• Bulk payments
• Accounting softwares integration

A single platform that collects all invoices

Many small businesses don’t have the time to manually collect and review invoices from multiple suppliers every month. This can lead to errors and delays in making payments which can have a negative impact on their cash flow. But with Libeo, you can automate your invoices collection processs, including those sent via email, allowing your accounting team to quickly validate them. This process is made even more effective by the fact that Libeo use Optical Character Recognition (OCR) to review invoices and detect duplicates.

A simplified workflow with to real-time updates on each action performed

Libeo's great strength lies in its ability to allow users to set up intuitive automated validation workflows, ready to use and configurable, with differentiated management of user rights. This automation also allows Libeo to validate invoices as soon as they are received, which greatly facilitates the organization of accounts payable departments.

Multiple payment options and automation rules

Libeo offers a wide range of payment options. You can choose from the following:

• Payment at custom date
• Partial payment
• Indicate a non Libeo payment
• Request approval
• Put on hold
• Payroll
• Mass payments
• Payments of invoices in foreign currencies (USD, GBP, EUR)

Automation rules and it enables companies to set up payment schemes based on different criteria such as invoice amounts, supplier names or customer types. This allows companies to automate their payment procedures and make faster payments without having to manually create new rules every time they need one.

Bringing together payment and accounting

Payment and accounting are two sides of the same coin. Libeo integrates with many accounting production or pre-accounting softwares like Xero, QuickBooks Online or Sage, so that you can have a holistic view of your payment cycle. The platform also an API so that you can integrate our system with any other software you use (such as accounting software).

Simply put, with Libeo, you can process invoices six times faster. The platform enables companies to manage invoices from their own accounts, ensuring greater efficiency and visibility over their cash flow and Days Payable Outstanding, reduces manual processing errors and secures payments to prevent fraud. The company is also constantly improving its infrastructure with new features such as payment approval requests, invoice analytics detail and confirmation of payee.