Businesses across Europe are reporting a fall in bad debt losses, according to a new report from credit management firm Intrum.
On average, 1.7% of the yearly revenue had to be written off due to non-payments in the past 12 months; a decrease compared to the 2.14% reported by European companies in 2017 and even further below the 2.44% that was seen in 2016.
Businesses around Europe have also reported that payment timings are going down. However, the average payment time is still well above the desirable 30 days that is stipulated as a maximum in the relevant EU directive. In corporate (B2B) transactions the average time it takes to get paid amounts to 34 days, down from 37 days in 2017. Interestingly, payments from the public sector still take longer — 40 days on average — despite the fact that the directive actually is mandatory for the public sector.
“Clients still pay late, but businesses all over Europe seem to have become slightly more positive when it comes to their ability to handle the consequences of late payments,” said Mikael Ericson, CEO of Intrum. “That said, 28% of the surveyed respondents experience hindering growth due to late or non-payments and 21% say that they are unable to hire new staff because their clients won’t pay them on time.”
“This shows that we all need to continue to work for prompter payments as it shrinks small and medium-sized enterprises (SMEs) vulnerability,” he added. “Payment within 30 days should, and will, eventually be the praxis of businesses all over Europe.”
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