Tariffs & Trade Uncertainty Creates Invoice Rejections Surge

Rejection for invoices from across the world have surged 273% in the first quarter of 2025, as companies brace for impact amid escalating tariff and trade disruptions, according to research from Basware.

The company's Invoice Rejection Analysis found that from its 272 million inspected invoices, businesses rejected 6.95% of invoices in Q1 2025 (2.9 million), compared to just 1.86% during the same period last year (744,000) – disrupting financial systems worldwide.

These rejections represent fractured supply chains, strained relationships between buyer and supplier relationships – while finance teams work overtime on damage control.

The US$186tn economic threat looming over global commerce

If this trend continues through 2025, the research indicates that the global cost would hit US$186tn.

Most global businesses process around US$560bn invoices annually. As rejection rates spike to 6.95%, this translates to 38.92bn rejected invoices. With the average enterprise value of US$4,782 per invoice, the financial impact snowballs into US$186.12tn – more than six times the annual GDP of the United States.

Jason Kurtz, CEO of Basware says: "It's clear that looming tariffs and trade uncertainty has led to a surge in invoice rejections as businesses scramble to renegotiate contracts and update payment terms. We haven't seen such seismic shifts in payment delays since the Covid pandemic, underlining the very real impact these trade wars are having on global supply chains.

"The reality is that the US tariff policy is creating huge strains for international trade, hitting business finance teams hard. We saw an increase of two million invoice rejections in the first three months of this year alone, suggesting companies are using payment delays as a financial buffer against wider economic uncertainty."

The findings were revealed in Basware's Invoice Rejection Analysis, which examined volumes and rejection rates across 272 million invoices throughout 2024 and Q1 2025 (1 January 2025 to 31 March 2025). Basware released the data to raise awareness of the impact erroneous invoices can have on business productivity and the economy. The company processes approximately US$1.1tn in invoice spend annually.

CFOs face mounting pressure as supply chain disruptions intensify

A rejected invoice occurs when a business refuses to process payment for goods or services, typically for specific reasons:

• Compliance issues: Incorrect purchase order numbers, missing tax information or regulatory discrepancies
• Vendor disputes: Disagreements over contracted work and/or pricing versus billed amounts
• Suspected fraud: Unusual payment details, suspicious vendor information or duplicated invoices
• Cash flow protection: Decisions to delay payments to preserve working capital

Beyond the immediate financial impact, rejected invoices create additional burdens:

• Administration costs: Each rejected invoice requires up to 15 hours of staff time to resolve
• Supplier relationship damage: The majority of suppliers report considering terminating relationships with customers who regularly reject valid invoices, in addition to incurring late payment fees
• Fraud vulnerability: Economic turbulence creates fertile ground for fraud, with over 70% of businesses falling victim to invoice or payment fraud annually

As tariff uncertainty brings further volatility into the global economy, the burden falls on CFOs to carefully consider the long-term implications of every dollar spent.

Research shows up to 50% of businesses pay suppliers late.

Automated invoice processing can reduce the time taken to approve an invoice from weeks to hours, ensuring timely payments to suppliers who may be facing their own cash flow challenges.

With these rejection figures being unprecedented, it indicates that organisations are cancelling contracts, renegotiating agreements and blocking payments in desperate attempts to stockpile cash reserves as recession fears mount.

With the rejection surge coming alongside the implementation of US tariffs across the world. Despite some respite with deals agreed by the US with the likes of China and the UK, there is still a 10% baseline tax on most countries – finance teams are scrambling to prepare for constantly shifting regulations and compliance requirements.

As a result, US manufacturers are rejecting invoices from overseas suppliers as they reassess supply chains and costs.

Comparing the first quarter of 2024 with 2025, invoice volumes also rose by 5%, from 40 million to 42 million. Basware analysts suggest the jump is down to businesses pushing through transactions before the full impact of tariffs is felt.

The ripple effect extends to financial markets, with the International Monetary Fund now predicting a 40% probability of a US recession this year, up from 25% last October.

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