In 2015 it was revealed that UK SMEs were owed £67bn in unpaid invoices, with construction being one of the most heavily affected sectors with £7bn of unpaid invoices (source: ABFA). That's 17% of the sector's annual turnover!
And the problem isn't getting any better. The value of unpaid invoices across UK SMEs is up by 8% compared to 2014, and a whopping 36% compared to 2011.
Unprecedented payment delays
It was also noted that construction businesses wait a staggering 107 days on average for payment, compared to 61 days for manufacturing SMEs.
Although this situation provides a significant drag on thousands of small businesses, there are solutions that allow SMEs to access financing through their receivables. Once organisations recognise that their unpaid invoices are short-term assets, they can ask for access financing backed up byusing those assets as collateral.
Supply Chain Finance
Moreover, supply chain finance solutions can be built in to electronic invoicing packages, which dramatically simplifies the entire process. All a supplier needs to do in such cases is to select the invoice it wants to finance straight on the electronic invoicing portal, confirm the terms and voila!
Additional benefits are attainable when the electronic invoicing is implemented as a hosted, Software as a Solution (SaaS) package, especially when that solution is used widely throughout the supply chain. This enables you, as the buyer, to improve working capitalwhilst also exploiting the strength of your supply chain.
Furthermore, such hosted solutions are both easier to deploy and simpler to use than traditional systems installed on your own servers. This ease of use greatly facilitates rapid uptake within your own company, including connection to your own finance system to streamline the entire invoice process.
These systems are also fully scalable, making it very straightforward to roll out the solution across selected suppliers at a pace that suits your business needs.
It's hardly surprising, therefore, that supply chain financing integrated with electronic trading solutions is empowering many companies to enhance key business processesas well as reducing the cost of transaction management. A major consequence of which is that Financial Directors are recognising the strategic value of technology within the business.
Finding the right solution
Thus, when selecting an e-Invoicing platform factors such as scalability and ease of deployment in your company should be key criteria, as should ease of adoption by suppliers through flexible connection options. Ideally, the chosen platform should already contain a high proportion of your suppliers, making adoption even simpler.
Equally important is the software provider’s track record within your industry. Does it have experience of addressing the specific challenges you face and the nature of the relationships you have with your suppliers? And does the platform include a supply chain finance offer?
The Tradex e-Invoicing platform, which includes a supply chain finance module, hosts the largest business trading community in the UK construction sector. With more than 35,000 companies trading 5.5 million electronic documents per year there is a very good chance that a significant proportion of your trading partners are already on the platform, making supplier onboarding that much easier.
Want to find out how much time and money Tradex can save your business? Click the button below to book a discovery session.