Across multiple industries, the issue of late payment is often a cause for concern. In the retail trade in particular, headlines featuring struggling small businesses and lengthy delays are a regular occurrence.

We welcome the news of prompt payments to SMEs, such as that seen recently by Asda. The supermarket giant has announced it is putting smaller suppliers, who fall into the category of doing up to £250,000 of business with Asda a year, on 14-day payment terms.

Businesses of all sizes are aware that providing fast payments is hugely important, but for small businesses it can be a struggle to plan ahead and manage cash flow. For SMEs and entrepreneurs, growth can be severely hampered if that significant payment just doesn’t arrive for weeks or even months beyond the due date.

Late payments are reported to be costing the UK economy £2.5bn annually, according toThe Federation of Small Businesses, yet Asda has demonstrated to all its stakeholders that it is a forward-thinking business and has a strong desire to follow responsible payment practices.

Is this the start in a more collaborative approach to payment between the big boys and the smaller businesses?

I believe Asda is not alone and that things are changing on a wider scale. The importance of fair payment practices is being recognised across the business community – take thePrompt Payment Code as an example, which now has nearly 2,000 signatories.

Change is also apparent in other areas crucial to cash flow and managing payments. Due to the rise of fintech, there is now plenty of opportunity for businesses to access additional support to ease cashflow challenges caused by lengthy terms and overdue payments.

Alternative finance solutions such as Tungsten Early Payment offer a quick injection of cash on approved invoices, helping businesses take more control of their working capital. The aim is to ease friction in the financial supply chain, to keep cash flowing and business growing.

More broadly, the automation of payment processes through e-invoicing has benefits for both payers and suppliers. The efficiency gains of going digital can save companies significant amounts of money when they are processing thousands of invoices a year, and can generate rich procurement data that can be analysed and leveraged for advantage. 

Through this automation process those suppliers also benefit from guaranteed invoice delivery and full visibility of their invoice status online.

Overall, I am encouraged by this and expect to see payment times fall in the coming years, driven by improvements in technology. There is without a doubt a growing recognition amongst the FTSE 250 businesses that this needs to happen and it is clear that the technical tools to facilitate automated processes are there and are being used by an increasing number of companies.

Whether it’s adopting shorter payment terms to support ambitious entrepreneurs, or improving visibility on invoices and enabling better management of working capital, technology is offering businesses of all sizes the opportunity to become more agile and flexible.