Basware invited me to join a chaired and recorded round table discussion in Hoxton, London last week.  We talked for 90 minutes about how this climate is impacting the speed at which we pay suppliers.  As a supplier to big multi-nationals, I’m at the sharp end when it comes to P2P ‘tweaks’, like unannounced payment extentions.  In February I recall scrutinising my DSO and my cashflow and noting that customers (big names too!) were stretching their terms by another 15 days or so.  Fortunately for me I had cash in the bank.  But it certainly made me pity the SMEs out there with the ’spend now, get paid later’ models.  71% of companies last year that went into administration did so because regardless of their profitability, they just dried up in the cash department.  This figure will surely increase this year.  Especially because getting your hands on credit is like touching the Holy Grail – highly improbable.

This climate of DSO elongation has made me a more pliable adopter of my customers’ P2P projects.  Namely P Card.  Cash now is worth the 2.5% – 3% that I might pay to the card company.  And is there a set up fee?  How much?  My view is that suppliers will do what they can to be paid to terms.  If this means joining an e invoicing campaign in order to be paid earlier or at least on time, so be it. 

While there are paper based companies out there extending terms with suppliers, and reducing the numbers of runs in the month so they can inflate their own cash ownership and dump a cool few million to the bottomline in the form of interest earned, other companies should look at this state we are in and crack on with an e invoicing project.  All those suppliers that comply to requests to join the e invoicing project should be paid net 25.  All those that don’t should be paid net 35.  There are considerations, like existing contracts, but so many suppliers are still off contract these days that there is still massive scope for an approach like this one.  And have you been toying with the idea of a P Card scheme for a while?  If I were a betting lady, I would bet your supplier onboaring would be relatively speedy.  Now is the time to deploy these supplier facing projects.  And not all of them require sizeable upfront investment.