One in six B2B suppliers are offering their business customers over two months to pay their invoices as a route to securing sales – twice as many who offered such terms in 2020.
That’s the finding in a new joint report from economic consultancy Cebr and lender iwoca, which reveals the number of suppliers offering repayment terms over 60 days to customers has surged from just 7% of suppliers in 2020 to 17% this year.
This comes as more businesses are asking for payment flexibility from their suppliers, says the report. More than eight in 10 suppliers say they have to adjust payment terms for business customers, nearly twice the rate four years ago.
Changes are having to be made to secure sales, as two in three B2B sellers report that offering trade credit increased their number of sales. Three out of four (75%) suppliers offer longer repayment terms for loyal or large customers, or for bigger orders.
On the other side of the deal, nearly half of surveyed business customers reported avoiding using a supplier, or considering doing so, due to short or non-existent payment terms.
The report, called Credit Where It’s Due, says the change is a welcome trend for buyers, outstanding payments in 2024 are more common than they were at the height of the pandemic. Nearly half of UK suppliers serving business customers are now owed in excess of £10,000 from their trade customers, up 13pp from 2020 levels. A third of suppliers are very confident that their invoices will be repaid, but fewer than one in three (29%) are ‘very confident’ in assessing customers’ creditworthiness.
iwocaPay co-Lead Lara Gilman said: “The sector has always talked about payment terms in the context of big corporations trampling over small ones. But since the pandemic it’s clear that across the board, firms – including SMEs – are now calling for flexibility from their suppliers to keep business moving.”
Christopher Breen, Head of Economic Insight at Cebr said: “Trade credit continues to be an important tool in B2B transactions, offering buyers the flexibility to purchase now and pay later. However, it presents challenges for suppliers, such as late payments and the potential accumulation of bad debt.
“Despite these risks, an overwhelming majority of B2B suppliers offer some form of payment terms, recognising the importance of trade credit in securing sales. The already widespread use of trade credit systems presents an opportunity for them to be modernised by the use of digital solutions, which could help both suppliers and customers to navigate these financial pressures effectively.”
