The B2B payments space tends to focus on the back office, but supplier payments are a hot topic even among the world’s largest, forward-facing businesses. New statistics from Apple, Payless and Aussie supermarket chain Coles offer insight into supplier payment practices from top corporations. For some vendors, working with large corporate customers is a leg up as they announce shortening of vendor payment times. For other suppliers, however, working with these companies can be a nightmare, with new information surfacing about extended and late payments.
$50 billion went to Apple’s U.S. suppliers, the technology giant said last week as it looked to defend itself against criticism by the Trump administration for building iPhones in China. The company said that money, spent last year, went to major U.S. firms like 3M and Corning, reports noted. Apple revealed those figures and said it wants to work with the White House to discuss lowering tax rates and bringing back offshore profits. It’s rare for Apple to disclose such information, and reports said this specific figure has never before been made public.
500,000 invoices have been paid by the U.K. Ministry of Defense (MoD) since the government agency upgraded its eProcurement system, it said last week in defense of allegations that it has struggled to pay its suppliers due to hiccups in that system upgrade. But, as was first reported last month, suppliers continue to come out and say they are owed millions of pounds by the MoD, with reports saying the total owed to these vendors may be as much as $2.45 billion. Some vendors said they have not been paid since last October, but the MoD said it is working to sort out payment of the “last few” invoices that have yet to be settled.
A 50 percent lengthening of supplier payment terms by Asda means businesses will now have to wait 90 days to get paid, reports said last week. A letter sent by Asda to international suppliers and seen by the media revealed that the company reviewed its supplier payment practices and will extend payment terms to 90 days beginning at the end of May of this year. Asda, owned by Walmart, is reportedly one of the first major retailers to impose harsher supplier payment terms following Brexit and the subsequent drop in pound value. In a statement, Federation of Small Businesses Chairman Mike Cherry said the news “yet again highlights the need for a crackdown on late payments.”
A 15 to 35 percent price cut is being asked by suppliers of Spirit AeroSystems, itself a large supplier of Boeing and Airbus, forcing those suppliers to rebid for their current works, reports said. The U.S. company reportedly sent a letter to its suppliers, seen by media, and warned the businesses that those contracts may be handed to overseas suppliers willing to work for less.
“There’s a massive threat of offshoring and an additional threat of insourcing,” said one Spirit supplier, who declined to be identified. The rebidding was announced to suppliers last month, reports added.
Fourteen days will soon be the length of time Coles suppliers have to wait to get paid, the Australian supermarket chain announced Friday (Mar. 3). That’s less than half of the average of 30 days Coles suppliers currently wait to get paid. According to the chain’s managing director, John Durkan, Coles has more than 1,000 suppliers that provide an estimated $1 million worth of merchandise every year.
“We understand how important cash flow is for small suppliers, and shortening payment times will help to make it easier for them to run their business,” he said in a statement. The news comes as Australian SME regulator body ASBFEO plans to probe supplier payment practices among large corporates.
Six months and counting — that’s how long some suppliers of U.S. shoe seller Payless say they haven’t been paid as the company struggles to stay afloat. As Payless reportedly meets with banks to discuss loan restructuring, several suppliers of the business have contacted Footwear News alleging Payless hasn’t paid them in months and that Payless has failed to explain its supplier payment behavior with those vendors. The publication warned that if Payless does file for bankruptcy, many of suppliers may ultimately go unpaid altogether.