CFO’s are worried: supply chain becomes a too intricate web of transactions

“Even though customers see their suppliers as their peers, late payment are still as common as ever”. That is one of the conclusions of a recent Basware report. The report also shows that CFO’s  are concerned that the interdependency between suppliers, partners and customers is creating commercial risks for buyer organizations.

The Cost of Control – Disrupted Networks. Part 2

This report looked at the impact that the increasing complexity within any web of commercial interactions is having on buyers and suppliers and the implications of late or erroneous payments.

The report provides us with some interesting opinions and priorities of around 550 finance executives:

• 15% of the CFO’s believe that invoices remain unpaid past their payment terms yet two thirds understand late payments cause problems for their suppliers.
• 38% acknowledge that their late or erroneous payment to suppliers impact the suppliers’ commercial performance to the same level as it would their own business.
• 46% of finance executives’ state the biggest challenges are the lack of flexibility of these systems and that changes made can disrupt complex supplier networks.
• 56% of the respondents deemed shared information and e-commerce systems to be the most effective methods of enhancing businesses collaboration across disparate supply chains and improving the way companies interact on a commercial level.
• 59% think the visibility of supply chain activity and supplier payment is becoming more difficult due to the increasing complexity of the networks.
• 62% claim connecting disparate parts of the purchase and payment process within their business is critically important in the next 12 – 24 months.
• 64% believe that the transparency of an open and collaborative supplier network helps to overcome some of these challenges and provides a more effective basis for sustainable cost savings than closed or exclusive network environments.

As a positive consequence of this networked commercial world, buyers are beginning to recognize suppliers as equals and take into account suppliers onward commitments to their own suppliers.