EOW Reflections 13/10/2023

Bear with me. I’m just back from the Credit Matter conference in Kraków and there are several reflections zinging around my head.

The overwhelming one is that people want to do the right thing. However, perhaps that’s a reflection of the people who go to conferences. They want to hear from other people about what they are doing to improve systems and processes, including getting suppliers along the supply chain paid quicker. Perhaps the people who go to conference are already of a mind that things need to improve and that they must be able to find a way to do that.

However systems and processes seem complicated and difficult to cut through. I have a constant image in my mind of the slide from Jamie Radford’s workshop (APA – Accounts Payable Association) of the Procurement to Payments process of a typical big organisation that has 6 steps in the chain. Jamie suggests that often the people working at each stage don’t understand the whole picture and don’t discuss the various steps with each other. This can leave the suppliers calling the Payments people, asking where their money is, long before the invoice has reached the AP department. Can we simplify the processes? I heard that question asked many times. On top of that can we talk more and collaborate rather than working in silos?

It would also help if the language around the processes were simplified. I’ve never heard so many acronyms in my life. It’s not that we can’t work out what they mean but we do have to hesitate and think which may leave us missing some of the most important points speakers are hoping to get across to their audiences. Imagine the poor supplier grappling with procurement, approvals and payment speak along 6 steps of the process. All the supplier wants is certainly about when the money owed will be paid. The smaller the business the less likely it is there will be a financial controller or someone else with the experience to understand the language.

And then I heard people try to apportion responsibility: the small business should put the work in at the start of the process to understand exactly what’s required in order to get paid; the big customer should understand and get to know their suppliers along the supply chain and give them all the information the need to get paid. I feel that there’s a role for everyone here. As a small business owner, I’d have several customers at the same time and each would have a different (possibly 6 step) process. I’d need help to navigate all those systems and get the invoice right and payable in each case. Some customers would explain in detail at the outset and give me a contact person in case of difficulty. We formed a working relationship and I felt like part of the team and those invariably were the customers who paid quickest and with whom I had the fewest problems. We both put the time in at the beginning of the working relationship. If I didn’t have a customer willing to work with me in that way, that’s where the payment delays crept in and I had to, eventually because I hate doing it, lift the phone and find the right person to talk to, to chase up payments. That would take time out of the working week that I should have been spending on doing something to build the business.

A couple more points struck me. Some suppliers are saying that if payments are late, that if there isn’t help to work out how to get paid on time, or that if customers aren’t willing to offer reasonable payments terms, they are increasingly turning down work. That should scare customers because the small firms provide the talent that help you build your success. It’s a lot less easy just to replace a small supplier than it used to be, with the skills and experience you need. Many are simply winding up their businesses (across Europe and not just in the UK) and walking away from work because they can’t take the stress any more. And where bigger firms are expecting smaller firms to accept longer payment terms the smaller business owners are increasingly suspecting that their bigger customers may be heading into financial trouble and so trying to conserve cash.

#EveryoneBenefits if suppliers get paid quicker.