Research from Medius, a leading provider of spend management solutions, reveals that damage to supplier relationships caused by late payments costs businesses 24% in lost orders.
The market research surveyed the views of 200 finance and 200 procurement decision makers in the UK to explore the risks to supplier relationships as the purchasing process transitions from procurement to finance.
59% said their vendors had reduced or stopped discounts because their invoices were being paid late; while 55% claim a business had refused to work with them again.
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.
Per Åkerberg, CEO, 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.
Åkerberg added: “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.”
To find out more about this research, please visit: https://www.medius.com/resources/supplier-journey-report/