International Business late payment is expected to rise across Europe according to latest research. A survey conducted by Intrum AB of 11,000 European companies predicts that Businesses are expecting late payments to rise. The rise is expected due to rising inflation, fuel costs and interest rates.
The 24th edition of the European Payment Report (EPR) clearly illustrates the multi-faceted challenges that businesses across Europe are facing. The Ukraine war, Brexit and the pandemic have created a turbulent economy across all nations.
It has created a wave of uncertainty among International Businesses. The biggest issue has been the damage caused by the pandemic and the economic holes it created. International Business late payment will only fuel the problem. Many state that international debt collection has a role to play in tackling the problem.
“Europe is going through an eventful and challenging period. Today, companies face unprecedented disruption and uncertainty, adding to the pressure on businesses that still seek to recover from the Covid years. Against a backdrop of inflation, increasing interest rates and regulation, companies are expecting a jump in late payments as well as raised barriers to growth during the remainder of 2022. Securing a sound cash flow is a top priority for a majority of the surveyed businesses”, says Anders Engdahl, President & CEO of Intrum.
Key finding 1: Inflation and interest rates are creating challenges
Across Europe, growth is slowing down while supply-chain disruption, and soaring energy costs drive inflation at a rate not seen for decades.
- 6 in 10 companies are worried that the risk of late payments will grow this year, largely because of inflation, increased regulation and rising interest rates.
- A majority of European businesses (58%) admit they lack experience of how to manage inflation and more than half say it is preventing them from growing the business (51%), meeting wage demands (55%), and paying suppliers on time (58%).
- 6 in 10 businesses are becoming more cautious with their borrowing and spending plans, as they expect interest rates to rise more than once during the next 12 months.
“Concerns are rising across Europe as inflation is accelerating and growth is flattening. If this trend is not broken, we could be facing a period of stagflation; contracting economic output combined with high inflation. On a positive note, labour markets across Europe have continued to strengthen this year, although low unemployment rates could lead to further upwards pressure on wages “, says Anna Zabrodzka-Averianov, Senior Economist at Intrum.
Key finding 2: Businesses expect their cash flow to suffer but lack the agility and expertise to manage the impact
Liquidity, cash flow and credit risk management make up the main strategic priorities, as companies seek to secure a solid financial position.
- 8 in 10 European companies state that strengthened liquidity and cash flow is a strategic priority for the year. A similar share mention improving debt management as well as credit risk management as top priorities.
- Half of the surveyed businesses report that they are weaker now than before the outbreak of the pandemic. At the same time, 6 in 10 say that the pandemic has motivated them to becoming better in managing risks related to late payments.
- 53 per cent of respondents say they would like to improve their management of late payments but find this difficult due to a lack of skills and resources in-house.
Key finding 3: Year on year, businesses increasingly see late payments as a significant barrier to growth
Late payments are hindering the growth of companies across European countries, hampering the economic and social development of the economy at large.
- 4 in 10 companies say that late payments are prohibiting growth of the company.
- 2 in 3 businesses say faster payments from their customers would help them expand their product and service operations, whereas 1 in 2 say it would help them grow by hiring more employees.
- Businesses are hopeful that the pandemic is coming to an end. Approaching 2 in 3 (64%) believe Covid-19 will stop having an impact on their country within a year, creating new opportunities for growth.
About the survey
The European Payment Report describes the impact of late payments on businesses’ outlook, growth, and development. The report is based on a survey conducted simultaneously by Longitude in 29 European countries between 17 January and 13 April 2022. In total, 11,007 small, medium and large companies across 15 industry sectors participated in the research.
Companies in the UK have been long faced with the challenge of recovering debts from overseas. International Business late payment is nothing new but it will be of welcome news to UK firms that there are suitable International Debt Collection Agency services available out there to help them.
Challenging times have been predicted for Businesses across Europe especially those engaged in cross border trade. Debt Collection is a valuable resource for any Business seeking to recover unpaid international business invoices in the coming months.