Late payment is a problem not only for individual entrepreneurs, but for the entire economy. How do you get this message across to the finance directors of those companies that are particularly slow at paying their invoices?
On-time payment of dues is something that shows entrepreneurial maturity and responsibility. We often hear about corporate social responsibility, but what about corporate economic responsibility? I work in the invoice financing business, and late payments are the everyday reality of my clients. According to the latest issue of our Bibby MŚP Index survey, over 70% invoices are overdue in Poland! And for some companies, late payments mean reduced operations, losing clients and business, and even going bankrupt. That's why we thought we had to do something, and we come up with the idea of our Płacę Faktury ('I pay my dues') campaign. And we have been targeting those late payers with our message for the past year.
How are you getting the message across – whose minds do you need to change to get money circulating more freely between businesses?
A company’s culture always comes from the top. It’s the CEO or the owner that sets corporate patterns. And if he or she considers that on-time payments of dues should be at the core of a given corporate culture, it will happen. So the message needs to reach the very top management.
Like with many CSR issues, be it to do with climate change or supporting charitable initiatives, prompt payment is something that many businesses believe is a good idea for others. There's always some excuse why this doesn't apply to my business. How do you address the problem of 'free riders', who benefit from the public-spiritedness of others, contributing nothing themselves?
I think that generally people tend to excuse themselves and judge others with less mercy. So it is all about changing people’s perspective and their attitudes. And the only way to do it is education. That’s why our campaign is aimed at making people aware of the problem and giving them really good reasons to modify their behaviours. We cannot forget that many entrepreneurs are late with their payments because their clients do not pay on time either. So for some it’s a matter of solvency, too. And this is where Bibby Financial Services can help with invoice financing.
Are you finding much support from Polish government circles? What is the stance of the key ministries towards the Płacę Faktury initiative?
We haven't taken it so far yet. A few weeks ago, we launched the second edition of the campaign and getting the message across to Polish entrepreneurs remains our main target. However, there is another problem that we have identified and it is definitely something that will require government action. I am talking about the right of transfer of receivables. Currently, it depends on a given company’s policy whether it will allow or not the transfer of receivables. So if your client’s policies state that it is forbidden, you can do nothing but wait for your payment. You cannot use invoice financing or sell the debt because you would be breaching contract terms. And if your business partner does not pay on time, you can either wait or take him to court which will eat up your time, your money and quite possibly your nerves as well. We are of the opinion that the government should ban such clauses from business agreements allowing companies to claim late payments from the business partners in the way they deem most suitable, being it invoice financing, debt collection or any other legally allowed mechanism.
Can you readily draw on examples of best practice from other countries in which Bibby operates? Which countries are the generally the fastest payers of invoices – and which ones the slowest? Is Bibby engaged in similar campaigns in other markets?
Płacę Faktury is a campaign created and executed by Bibby Financial Services Polska. We came up with the idea because late payment of dues is something that we had identified as a general problem across the Polish economy. We have not drawn inspiration from any other Bibby Financial Services campaign worldwide.
As for the speed of payment, the latest Payment Practices Barometer from Atradius shows that late payments were most frequently reported in Austria (95% of respondents) whereas the UK continues to have the highest proportion of domestic and foreign past-due B2B invoices (48.7%). On the other end, our experience at Bibby Financial Services shows that Nordic countries such as Denmark or Sweden tend to be fairly good payers – but even they struggle to pay on time.
Do you intend Płacę Faktury to be a long-term initiative continuing for several years, or is it a one-off?
As I have previously said, we have just launched the second edition of the campaign and at the moment we are decided to continue with it.