2022 Statistics About Late Invoice Payments | Practical Solutions
Late invoice payments are increasing worldwide. So, what that the statistics saying about late payments? How do you make your invoices be paid faster?
Note: While we focus on Small and Medium-sized businesses (SMEs), it does not mean that they are few. SMEs are 99% of all businesses in the US and Europe and potentially the whole world.
Late Invoice Payments Statistics and surveys:
Although there are many statistics that prove the real growth of the market share of the e-invoice system. Financial experts believe that based on data and statistics, late invoice payment is in increase over time. The reason for this increase may be due to incorrect invoice formats, invoice errors, bad payment conditions, and many more.
Here are some basic statistics that highlight this problem:
- In terms of SMEs, 54% of these businesses expect that their payment would be paid late than the due dates.
- Generally speaking, invoicing is usually paid 6 days late, and 20% of invoices are late for more than 2 weeks.
- The other 33% of late invoices are late for more than a month.
- While the other 20% of late payments would be late for at least 60 days late.
- In another survey, only 6% of manual invoices are paid within 30 days. However, 94% of invoices are paid after 30-60 days.
- Experts at “Amalto” estimate that 61% of late invoice payments occur because of incorrect invoices.
- There are 11% of customers who received no invoice payment in the first place.
Cost Of Following Up With Unpaid Invoices
Companies would usually chase the late invoices. Some of them give up, and others waste a lot of money and effort following up. Here are some dates that elaborate more about that:
- In several surveys, more than 40% of businesses would usually find no time to follow up with late invoices and other unpaid resources.
- So, as reported, if you are an owner of a small business, you are expected to spend about 15 days each year chasing your late invoice payments.
- Other statistics say SMEs spend 4 hours each week chasing late payments.
- 12% of SMEs use to hire an employee especially for chasing the late payment.
- In the UK alone, this chasing process would add up to over £2 billion.
The Negative Impact Of Late invoice payments
In addition to the time and money wasted in chasing late payments, there are also other many negative impacts resulting from this problem:
- There 30% of SMEs face a negative impact that may affect their investment or even operation.
- In Europe, 1 out of 10 small businesses gets their invoices paid late. One of these countries, the UK government, calculates £23.4 billion worth of late invoices.
- It is reported that more than 10% of invoice payments could be bad debt or would neer be paid at all.
- SMEs in America usually lose 51.9% of the value of their B2B payments. Their late payments are not even paid within 90 days even after the invoice due date.
Region-based statistics about late invoice payments:
Statistics are now pointing to an increase in late invoice payments in many regions such as (South America, Southeast Asia, and the Middle East). For example, late payment increases in some countries are the following:
- Hong Kong faces a 4% increase.
- India faces a 17% increase.
- Thailand experiences a 16% tremendous increase.
- The Philippines faces a 5% increase.
- Canada expects a 70% late invoice payment with an increasing rate.
- The USA faces 45% – 39% late invoice payments with an increasing rate (7 days late on average).
- Russia, the UK, and Poland face a range of 4% – 6.5% of late invoices rate.
- Africa shows a considerable of late invoices by 31%.
- South Africa still accounts for 63.9% of late payments compared to 15.3% a year before.
- In Ireland, 67% Of small and medium-sized companies receive late invoice payments.
- Companies in Japan tend to pay earlier than companies in other regions (six days early).
- Australia, Mexico, and South Africa are at the bottom of the countries list that pays their invoices late (one month on average).
Could E-invoice systems decrease late invoice payments?
There are a number of studies that focus on the percentage of late invoice payments of e-invoice systems. It then is compared to the paper-based systems that use no automated processes. The findings are the following:
- It is reported that 33% of transactions are getting paid on time if the business involves an automated system. On the contrary, only 24% of equivalent paper-based invoices are getting paid on time.
- Other surveys show that 42% of automated invoices are paid on time, compared to 25% for manual invoices.
How to get paid Faster?
To get your invoice paid faster, you should ensure that you apply the following criteria and standards. These best practices would make it more probable to be paid within the due date of your invoice:
Use Invoicing software
You need to use invoicing software that will keep all your data, settings, terms, and templates stored. You need to ensure that this software sends automatic reminders to your customers. Use the software that allows you to customize your invoices to match your brand requirements.
Interpret your Late invoice payments data
Invoicing software allows you to track the attitude of each of your customers. You need to interpret these data very carefully. When a customer regularly becomes late overdue, you will be able to distinguish these bad buyers and adjust the penalties accordingly. You can also put tighter terms on these bad buyers without affecting the good clients.
Add Strict Terms
Your invoices payment terms, conditions, and penalties must contain strict conditions chasing the bad buyers. For example, don’t make the payment due date more than 15 days.
You could add that when a customer pays the invoices on the first 10 days of the payment due date, he will enjoy a 10% discount.
Use Calendar-Based Reminders
You should send reminders to your clients several times, politely, within the due date. You should not wait until the payment due date ends.
Easy and Standard Invoice
Try to make it very easy for your clients to pay you. So, you should make your invoice as descriptive as possible with no ambiguity. Break down the unit costs, extra fees, taxes, and all the details. You should also provide various payment methods.
When using automated online invoicing tools, we estimate that you can improve your AP department process by a range of 60% – to 75%. There are many invoicing tools that you can use. However, we offer a unique system that would speed up your work.
We offer you an industry-tailored invoicing and accounting system that will enable you to handle recurring invoices. The software also allows you to do the following:
- Manage your sales
- Issue invoices
- Track your payment
- Do all business accounting tasks
- It calculates taxes
- Design and export accurate real-time reports
- Following up with your client.
We also offer you a free service-based invoice template and generator that will suit all your new and recurring invoices.
Here are some of the resources we depended on to compile the mentioned statistics and surveys:
Clover, Core Integrator, Vanguard, Federal Reserve Bank of Philadelphia, Share Space, CFO, Atradius, Share Space, Industry Week, Zycus, Document Imaging Report, Medius, Vanguard, Credit Research Foundation, Credit Today, Dartmouth College’s Tuck School of Business, Statista, State of ePayables, Worldpay Global Payments Report, CPO Uprising, Payables Friction Index, Thomson Reuters, and many more.
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