Many businesses are currently caught in a payment tug-of-war as supply chain disruptions persist. On one side, buyers hold onto cash to protect the balance sheet. However, on the other hand, the suppliers they rely on are facing an increasingly cashflow-challenged landscape where the bills do not wait.
SAP Taulia’s annual supplier survey, based on results from 10,854 suppliers from 129 countries, shows that this payment gap is wider than it’s been in years. However, it is bringing a shift that is changing the power dynamic between buyers and suppliers, moving it away from “waiting for the check” toward a new era of active control.
The Squeeze: The Widening Payment Gap
The reality is that when the economy takes a turn to uncertainty, buyers tend to cling onto their cash a little tighter. While this is a defensive move we have seen before, it pushes the pressure directly onto suppliers.
The data shows suppliers are being hit harder this year. Late payments have climbed from 51% to 55%, while the number of suppliers getting paid on time has dropped to 37% compared to 42% last year.
As payment predictability drops, we can see that what looks like a smart cash preservation strategy in a boardroom can quickly become a cash flow crisis for your suppliers. Although this strains the way cash moves through the supply chain, suppliers are now being prompted to build their own safety nets.
The Reaction: Suppliers are Taking the Wheel
The encouraging news is that suppliers are not simply waiting for the tide to turn as they are actively taking charge of their own financial destiny. Noticeably, interest in early payment programs has reached a five-year high of 66%, and their motivation behind this has changed.
A few years ago, many suppliers saw early payment as an emergency “panic button.” Today, it is a practical way to keep the lights on. When we asked suppliers why they are choosing to get paid early, the reasons were straightforward: they want to bridge cash flow gaps (28%), ensure payment predictability (21%), and keep day-to-day operations running smoothly (20%).
Suppliers are essentially calling the shots on their own timing. Instead of being at the mercy of a buyer’s 60-day term, suppliers want the option to settle an invoice sooner and use that cash for business priorities.
Choosing Flexibility
Since suppliers are more discerning than ever, they are diversifying their sources of cash. Turning to self-serve options that give them more control, it’s clear that suppliers are not just going to wait if a buyer’s payment process is too slow or rigid.
Alongside early payment programs (16%), suppliers are turning to a variety of tools to keep their businesses moving. Credit cards or virtual cards (22%) and lines of credit (16%) now rank among the top five most used sources of liquidity. If a buyer wants to be a "partner of choice," you have to provide the flexibility and speed that suppliers are already finding on their own.
The Bottom Line
At the end of the day, the story behind the numbers from these 10,854 suppliers shows us that the traditional approach to managing payments is a quiet threat against resilient and healthy supply chains.
While suppliers are under pressure from late payments, the power dynamic has shifted. Suppliers are already finding their own ways to stay nimble through technology and self-serve liquidity tools. To prevent supply chains from breaking, buyers should provide the flexibility and predictability that let suppliers stay in the driver’s seat.
