Stephen Carter, Director, Product Marketing
Prices are climbing across the globe. Persistent inflation has increased expenses for raw materials such as steel and aluminium, while shifting global trade policies have forced businesses to adapt to fluctuating costs at unprecedented speeds. The impact of US policy changes alone has led to 61% of chief economists anticipating long-term shifts in the global economy.
Meanwhile, the complexity of today’s supply chains means there is now a variety of risks to face, including the threat of cyberattacks impacting supply chains. These disruptions are causing significant financial damage. In recent months, major car manufacturers have suffered cyberattacks that have cost an estimated £1.9 billion, affecting over 5,000 businesses. The ripple effect of these attacks is potentially devastating and only serves to create more financial tension for suppliers.
This increasingly difficult climate is pushing many suppliers to the brink of financial collapse, and late payments can be the final straw that sends suppliers under. To protect supply chains, organisations need to overhaul how they make payments and take a more strategic approach. Those who don’t will miss out on opportunities to use payments strategically and collaborate with suppliers on identifying new savings or revenue streams at a time when every penny counts.
The Cost of Late Payments
In already strained supply chains, late payments only serve to create further financial tension. In 2025, late payments are estimated to have cost the UK economy almost £11 billion per year.
Paying suppliers late slows down cash flow and causes further late payments down the line, creating a vicious cycle. This can even cause suppliers to cut ties with key customers, as 20% of UK businesses report damaged supplier relationships because of cost pressures.
While many businesses understand that effective payment practices can ease cashflow pressures and strengthen supplier relationships, they are unable to realise these benefits due to siloed systems and limited visibility into their payment processes. When invoicing and payments are disconnected from contracts and performance data, it’s nearly impossible to enforce milestone or quality-based contracts, leading some firms to pay for goods or services they’ll never see. Late payments are straining supplier relationships at a time when maintaining a resilient supply chain has never been more important.
Using Payments to Reduce Operational Risk
As the economic climate mounts financial strains on suppliers and supply chains, organizations must move beyond a transactional view of payments, and here is where procurement can help. Procurement needs a more strategic approach to how and when a supplier is paid, when going to market, or awarding contracts. This starts with visibility into the payment process. By modernising the settlement experience and managing this within a unified platform, businesses can gain real-time insight into cash flow and supplier transactions, making it easier to forecast needs, confirm receipt of funds, and ensure suppliers are paid on time. This level of transparency will allow organisations to instantly respond and take the necessary steps to stay ahead.
Strategic payment management can be the difference between remaining competitive and just staying afloat. Businesses that prioritise healthy supplier relationships – even during the challenging periods – are far more likely to enjoy preferential treatment, including better pricing and priority allocation during shortages. But cost challenges are already taking a toll: 24% of UK businesses report they are no longer considered a ‘customer of choice’ due to cost pressures straining supplier relationships. This shows just how strained supplier relationships can weaken resilience.
A strategic approach
Procurement teams play a critical role in strengthening supply chains, delivering savings, and preserving essential supplier partnerships. By using a range of flexible payment options, such as early payment discount or staged payments, organisations can work collaboratively with suppliers to improve cash flow for both parties. Similarly, allowing bulk purchasing consolidates orders across departments or regions to negotiate better pricing, lower unit costs, and cut shipping expenses.
Yet, few businesses are taking full advantage of the strategic opportunities that modern payment solutions offer. Only 32% are using early payment programmes, and just 37% have invested in technology to improve supplier collaboration.
This indicates that many organisations are missing out on significant savings because they still treat payments as a transactional rather than strategic activity. One that can also strengthen supplier relationships to drive long-term operational resilience.
Powering through the challenges
As firms across supply chains grapple with rising costs, the risk of severe financial stress and insolvency looms large. To withstand this pressure, organisations must take proactive steps to mitigate financial impact and protect their bottom line. As tensions continue to accelerate in supply chains, maintaining strong bonds with suppliers will be a decisive factor in businesses staying afloat.
In the current volatile environment, late payments are creating further financial difficulties for organisations. To address this persistent issue, businesses need clear insight into their supplier relationships – allowing them to spot opportunities for strategic measures and bolster their financial resilience. By collaborating with suppliers, organisations can ensure they maintain preferential treatment during shortages and limit the effects on operational resilience.
