Vendor Payment Risks

Vendor Payment Risks

Often, we talk about ensuring proper due diligences on vendors to avoid any business disruptions. While reputation of vendors is very critical to the functioning of a business enterprise, there is also an emerging concern amongst vendors wrt payment delays from those very enterprises that conduct their comprehensive reputation risks assessment.

  1. In India, vendors catering to almost every sector have experienced delay in payments – when payments are delayed from the client company, it obviously has a trickle down effect right uptil at the beginning of the supply chain
  2. Payment cycles are usually longer in India, while some vendors do talk about interest for late payments, however this trend is still not widespread
  3. Sometimes, large companies have inefficient vendor management and invoice management systems that lead to payment risks for vendors
  4. Lack of centralized processes in companies also contribute to such issues
  5. Where government orders are concerned, a large percentage of billings are still done in the form of hard copies
  6. Or is it a social and a cultural thing to delay payments? This is something that one needs to analyse at a much deeper level

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