On-time payments are key to business recovery
13 to 20% of companies still suffer from late payment. Yet punctuality in payments will be the key to recovery. Collection software will be essential.
“Economic recovery will necessarily involve payment on time, or even earlier”. This is the conviction defended by Pierre Pelouzet, the Médiateur des entreprises, during a webinar organized by Esker: “Yes, the crisis is over, and we are no longer experiencing the considerable payment delays observed in the spring of 2020”. Indeed, at the same time last year, SMEs were paying 18.6 days late, and large accounts 8.1 days late. This compares with 10.9 days and 8.9 days respectively in 2019. Even so, “13 to 20% of companies continue to be paid late“. A major problem.
Restoring customer confidence
At a time when inter-company credit represents 700 billion euros, Pierre Pelouzet, Médiateur des entreprises, warns : “paying late kills the economy, whereas paying on time, or even earlier, gives it a boost. One day’s payment in advance is equivalent to 1 billion euros injected into the French economy. On top of that, paying customers on time keeps their trust.” These subcontractors, most of whom are SMEs and VSEs, generally have less cash at their disposal, and need toensure the working capital, WCR and DSO necessary to maintain their business. “In addition, these same customers will prove essential at the time of recovery,” stresses Thierry Pralong, head of the accounting department at Chantiers de l’Atlantique.
Because paying bills on time, or even earlier, is possible, 16 major companies have decided to set an example. They include L’Oréal, Michelin, EDF, Engie, Danone, Orange and Système U. These cash-rich companies have agreed to pay their invoices within 30 days, rather than the traditional 60 days. This is a welcome boost, particularly for the more fragile VSEs and SMEs. All have set up an accelerated payment system, applicable even in times of crisis and teleworking.
Tools and people
For Thierry Pralong, there are three really effective ways of speeding up payments: dematerialization of processes, invoice traceability (which makes customer relations more fluid) and simple dashboards.”Traceabilityavoids any conflict with customers. When a customer calls me to ask about the status of his invoices, we can give him a credible answer in two minutes. he guarantees. Finally, “simple dashboards are useful for estimating the number of invoices to be processed each month, and thus adjusting the number of accountants needed to pay all your invoices on time”.
“Being in control of these administrative processes means being able to decide when I pay my suppliers,” says Emmanuel Olivier, CEO of Esker, which specializes in document dematerialization. The mistake not to make is to believe that, with the implementation of an IT system, I no longer need my employees,” urges Pierre Pelouzet. . We still need people to respond to customers when there’s a dispute, a difficulty, or to recreate that bond of trust. If what we gain with technology is reinvested in people, we’ve got it all figured out.” These dematerialized processes have also “enhanced the role of the accountant, since today an accountant really does accounting and much less administrative work”, continues Thierry Pralong.
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