Payment practices have deteriorated extra sharply than at any time since 2008 | EUROtoday

DAccording to a examine, international fee practices deteriorated extra sharply final 12 months than at any time for the reason that monetary disaster of 2008. The interval between invoicing and fee has elevated by three days to 59 days, in accordance with the examine revealed on Thursday by the credit score insurer Allianz Trade. The enhance was nearly twice as excessive as in 2022.

German corporations due to this fact stay dependable “quick payers”: they pay invoices on common after 54 days, a rise of 0.8 days. Companies within the Netherlands and Scandinavia additionally pay quicker than the worldwide common. In France, Italy and Spain in addition to in Asia, payments are paid considerably in a while common.

Important indicator of fee defaults

“The longer companies have to wait for their money, the more likely it is that the invoice will not be paid at all,” stated the pinnacle of Allianz Trade in Germany, Austria and Switzerland, Milo Bogaerts. “In this respect, payment behavior is an important indicator of potential payment defaults and thus a harbinger of insolvencies.” German corporations nonetheless have comparatively good fee conduct. Nevertheless, Bogaerts expects that the variety of bankruptcies within the Federal Republic will enhance by 13 p.c this 12 months.

Profitability is taken into account crucial issue influencing fee conduct in Europe. According to the examine, it has a larger impression than financing or the financial cycle. In this context, a slowdown in international demand in 2024, coupled with continued excessive working prices, may create the circumstances for additional deterioration in fee phrases, significantly in Europe.

“A drop in profitability of just one percentage point could extend payment terms by over seven days,” stated Ano Kuhanathan, head of company analysis at Allianz Trade. “In view of the threat of a loss of profitability in 2024, European companies should prepare for longer payment periods.”