Causeway Technologies looked at a sample of 8,052,300 invoices sent by suppliers to main contractors last year. It found that more than 810,000 were rejected for not meeting the rules of the receiving business.
No wonder construction has an issue with late payment!
The software supplier found that the top five reasons for invoices being rejected were:
1. The purchase order number on the invoice sent by the supplier was not a valid open purchase order from the receiver (the customer)
2. The value on the invoice sent by the supplier exceeded the value on the purchase order or receipted value of goods against that order
3. The total value or total tax submitted in the invoice did not match the sum of the line items on the invoice
4. The customer’s company name on the invoice was incorrect
5. A product code on the invoice did not match a product code in the catalogue held for that supplier
Causeway customer relationship director Rebecca Sperti said: “Ten percent of all invoices are automatically rejected and get sent back to suppliers simply because they don’t meet the customer’s rules. It might sound like a small percentage, but if you consider there will be about 40 million invoices sent each year to the top 100 contractors alone, we’re talking about tens of millions of invoices across the industry as a whole, so it’s a huge number.
“Cashflow and business resilience is being impacted every time someone keys in incorrect data or forgets an essential bit of information. This hits SME suppliers particularly hard, especially when processes for managing payments are historically manual. This can often result in significant delays for suppliers while they wait days for someone to check and then reject their invoice.
“With an increasing number of top contractors signing up to the Prompt Payment Code, suppliers should start to see more efforts to pay within the terms agreed. But this won’t change the need for invoices to be submitted correctly.”
Causeway sells an e-invoicing product. “Electronic payment processing and a fully digital process is the best way to ensure speed, accuracy and operational efficiencies for both sides of the payment process,” Rebecca Sperti said.