Medius Research Finds Poor Supplier Payment Processes Increase Costs and Create Bad Business Reputations
Late payments cost businesses 24% in lost orders.
2 JUNE 21 – Research from Medius, a leading provider of cloud-based spend management solutions, reveals that damage to supplier relationships caused by late payments is costing businesses 24% in lost orders.
The market research from Sapio surveyed the views of 200 finance and 200 procurement decision makers in the US to explore the risks to supplier relationships as the purchasing process transitions from procurement to finance.
Almost three quarters (73%) of procurement professionals admitted that their supplier relationships had suffered due to late payments. 59% said their vendors had reduced or stopped discounts because their invoices were being paid late; 62% had experienced goods or services being withheld until invoices had been paid; while 55% claim a business had refused to work with them again.
One procurement professional told us that “Finance is consistently paying our vendors late which causes problems for procurement,” while another said, “Finance only talks to procurement when they have a payables issue.”
Finance claims their businesses have experienced the impact of damage to supplier relationships, with 27% claiming that the reputation of their organisation has suffered; 28% said that it has caused a breakdown in relationships between themselves and procurement; while 24% claim that these issues have caused customers to cancel orders.
The research suggests that the reason payments are being made late begins at the start of the supplier relationship, with over half of respondents claiming that vendors struggle with the onboarding process. 44% of finance professionals admitted they would like to work more closely with procurement to make the onboarding process easier.
Daniel Saraste, SVP Product Strategy, Medius said: “This research clearly shows that late payments are causing significant issues for both procurement and finance, causing the business to lose money and even in some cases causing damage to business reputations.
“While it’s procurements role to maintain strong supplier relationships, finance’s priority is to ensure the organisation is in the best cash position, meaning the timely payment of invoices isn’t a top priority. Without a common view of what’s important and why, procurement and finance will continue to find themselves at odds with each other.
“The good news is that the research shows that two in five respondents claim that finance and procurement have a good working relationship but admit there’s room for improvement and better communication between the two departments.
“Both business functions agree that they see the benefits of integrating eProcurement and accounts payable automation to smooth both purchasing and payment processes and ensure prompt payment processes.”
To find out more about this research, please visit medius.com.
For more information, please contact:
Erica England, Arketi Group, PR & Marketing (for Medius)
eengland@arketi.com, 904.803.8808
About Medius
Medius is a leading provider of cloud-based spend management solutions, helping organizations drive their business forward by enabling best-in-class process efficiency, cost saving opportunities and greater financial control.
Nearly 4,000 customers and 500,000 unique users worldwide use Medius spend management solutions, managing transactions worth more than $160 billion annually.
Medius was founded in 2001 and acquired procurement solution provider Wax Digital in 2019. Today, the company has over 400 employees and offices in Sweden (HQ), the United States, United Kingdom, Australia, Denmark, Norway, the Netherlands and Poland. For more information, please visit medius.com.
