Early NACM Survey Results Suggest Cash Issues Dominant Cause of Late Payments

The preliminary results of an NACM survey about what's to blame for customers' late payments suggest that cash issues, rather than technical errors, are the dominant cause for delays. With two more weeks left before the survey closes, 36% of respondents have said that only 0-10% of the customers' late payments are caused by billing, invoicing or other technical errors, while 90-100% of them were caused by cash issues.

The second most popular response so far still leans heavily toward cash being the culprit for most delays, with 17.5% of participants saying that only 10-20% of their customers' late payments are caused by errors, and 80-90% of them caused by cash issues.

In the comments, respondents acknowledged that "cash issues" weren't necessarily just tied to the customer's inability to pay. Many of them reported that their customers are fully capable of making payment according to terms, but simply don't for various reasons. "The majority of our late payments occur as a result of a customer cash management decision," said one participant. "These decisions have more to do with financial metrics than cash availability."

Other respondents blamed a "built-in slow-pay culture" for some customers' late payments. A number of participants from the construction industry also argued that poorly-written contracts with "pay-when-paid" clauses led to cash issues for their customers, which then trickled down to delay payments to companies further down the ladder of supply.

Of the smaller group of respondents that had a greater percentage of late payments due to errors, specific problems with shipping, pricing and invoicing were the primary causes. Many also noted that their bigger customers were more likely than their smaller buyers to cite errors when making past-due payments.

The two-part survey, which also asks which company department is responsible for resolving errors, will remain open until the end of the month. Click here to participate now! Respondents will receive .1 Roadmap points toward an NACM designation and be entered into a drawing for a free teleconference registration.

- Jacob Barron, CICP, NACM staff writer

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