ITESOFT Recently Ran a Webinar looking at Duty to Report Payment Practices 1 Year On…
During ITESOFT’s recent webinar (Duty To Report Payment Practices 1 Year On) a number of trends would appear to be coming to light…
The first, most striking element of the reports submitted, is how few there have been, and how many of those are incomplete.
So far, in May 2018, there have been a little over 1,600 reports submitted, of which about 10% contain nothing more than a company name!
In fact, during the recent ITESOFT Duty to Report webinar itself, attendees were asked how many of them had submitted a report, if they were even obliged to do so, the results of this were:
Yes, a report has been submitted: 16%
No, a report has not been submitted: 84%
Unsure as to whether we need to report: 0%
As was referenced live, this matches, quite closely, the current status of submissions under this legislation.
Now, having insight into so many organisations payment practices is great, but this number falls very short of the estimated 16,000 that were expected to fall within the requirements.
Of course, submission deadlines are tied into a company’s financial year end, and half year end. Looking at this in a little more detail we can expect a large number of submissions to be made over the coming months, to November 2018.
So What Trends Are Emerging?
Highlighting any real trends can be very difficult with, what appears to be, such a small segment of data to work with. However, this is what is available, so should be assessed.
The reports that are required to be submitted are pretty detailed, although some of the questions that are asked, do leave the answers open to interpretation. The reports ask, early on, what the average time to pay is, the results to this are:
34% pay, on average, within 30 days.
47% pay, on average, between 31 and 60 days and
9% pay, on average, greater than 60 days.
Now, there are some real outside answers in this, companies claiming all invoices are paid with 0 days… And at the other end of the spectrum companies paying within 1000 days! When reviewing the reports themselves, in both instances, the organisations in question have stated that they only pay intercompany invoices.
How Many Invoices Does Your Company Pay Within 30 Days?
Interestingly, ITESOFT asked the attendees at their webinar this question live, although in a far broader way than is asked in the DTR reports, the results?
Less than 50%: 50%
More than 50%: 50%
Again, this really does fit with what the reports submitted to date are showing. There is a very even balance between companies paying more or less than 50% of their invoices within a 30 day period from receipt.
Now, I am not suggesting that 30 days is best in breed, or that every invoice, in every organisation, should be paid this quickly. But surely that should be a target? Especially when dealing with SME’s for whom cash flow is often critical to their ongoing success, or in some cases existence.
E-Invoicing As Defined By Duty To Report
One of the key areas that this legislation really shines a light is on E-invoicing, and peoples concept of what this means, my colleague Rory Coleman-Smith recently wrote a piece on this.
To quote from the reports, E-invoicing is defined as:
“This is where suppliers can electronically submit AND TRACK invoices. It is not just allowing suppliers to email them an invoice.”
Again, what do the reports show so far? Of the organisations that have submitted a complete report, only 23% actually offer E-invoicing. In a slight change, ITESOFT decided to ask their attendees if the description above matched their understanding of E-invoicing, their answers were;
This is a staggering result, and incredibly refreshing, especially after so many years and so many mixed messages about this. The fact that such a small number of organisations are yet to embrace this technology though should be a point of concern. Maybe the issue is actually that the benefits are not clearly enough defined, and explained. Not just to the organisation that implements a solution, but also to their suppliers.
A true supplier portal, for instance, allows a business to speed up their processes, speed up their payments, reduce the impact of interruptions and also reduce their environmental impact.
The same can be said for the suppliers who are given access to this, they can move into a faster, more digital way of communicating, improve their visibility, cash flow forecasting, make savings and reduce their own environmental impact.
For those smaller suppliers, this visibility, and ability to receive real time information about pending invoices can be invaluable in a vast number of ways.
Well, what will be interesting to see is how many more organisations actually submit their reports, and what action is taken against those that don’t. The risk is, if no action is taken, then this great insight into the world of big business payment practices will be lost. Along with any potential benefit to other organisations, in particular SME’s.
The coming months, and reports, will be very interesting indeed to the observer, and it will be equally interesting to see whether these early patterns stay much the same.