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European Payment Report 2020
Key findings
European Payment Report 2020
Key findings
Businesses are taking steps to protect themselves from a historic recession
The Covid-19 pandemic has shaken European economies and brought business operations to a halt in many sectors, leaving firms scrambling to salvage their cash flow.
To protect their business in preparation for recession:
- 38 per cent of respondents plan to cut costs
- 35 per cent will be more cautious about debt.
Year on year, these are the top two measures that European businesses take to protect themselves.
One preparatory measure has changed this year: businesses are being more cautious with their hiring plans.
- 29 per cent of businesses are looking to cut down on recruitment to prepare for a recession
- In 2019, it was 18 per cent.
Businesses are taking steps to protect themselves from a historic recession
The Covid-19 pandemic has shaken European economies and brought business operations to a halt in many sectors, leaving firms scrambling to salvage their cash flow.
To protect their business in preparation for recession:
- 38 per cent of respondents plan to cut costs
- 35 per cent will be more cautious about debt.
Year on year, these are the top two measures that European businesses take to protect themselves.
One preparatory measure has changed this year: businesses are being more cautious with their hiring plans.
- 29 per cent of businesses are looking to cut down on recruitment to prepare for a recession
- In 2019, it was 18 per cent.
Which, if any, of the following new measures do you expect your company to initiate during 2020 in order to plan for an economic downturn?
Asked of respondents who said their country is in a recession or they expect one within five years.
Which, if any, of the following new measures do you expect your company to initiate during 2020 in order to plan for an economic downturn?
Asked of respondents who said their country is in a recession or they expect one within five years.
Which, if any, of the following new measures do you expect your company to initiate during 2020 in order to plan for an economic downturn?
Asked of respondents who said their country is in a recession or they expect one within five years.
Risk from debtors puts firms under pressure, calling for new strategies
After 11 March 2020, according to research by artificial intelligence firm Sidetrade, the number of unpaid invoices increased by:
- 23 per cent in the UK
- 26 per cent in the Netherlands
- 44 per cent in Belgium
- 52 per cent in Spain
- 56 per cent in France
- 80 per cent in Italy.
The consequences are worrying – particularly for SMEs that have smaller reserves and rely on a steady cash flow. Over time, we can expect SMEs to start delaying their own payments as they try to cope with falling demand and income.
Europe’s businesses do not expect the pressure to ease up.
- 43 per cent expect risk from companies’ debtors in terms of late or non-payment to increase over the next 12 months
- 19 per cent say that it will increase significantly
Risk from debtors puts firms under pressure, calling for new strategies
After 11 March 2020, according to research by artificial intelligence firm Sidetrade, the number of unpaid invoices increased by:
- 23 per cent in the UK
- 26 per cent in the Netherlands
- 44 per cent in Belgium
- 52 per cent in Spain
- 56 per cent in France
- 80 per cent in Italy.
The consequences are worrying – particularly for SMEs that have smaller reserves and rely on a steady cash flow. Over time, we can expect SMEs to start delaying their own payments as they try to cope with falling demand and income.
Europe’s businesses do not expect the pressure to ease up.
- 43 per cent expect risk from companies’ debtors in terms of late or non-payment to increase over the next 12 months
- 19 per cent say that it will increase significantly
Q3. To what extent do you see risk of late/non-payments from your company’s debtors developing during the next 12 months?
This marks a dramatic shift in attitude from last year’s survey:
- In 2019, just 16 per cent expected risks from debtors to increase
- Three-quarters expected the situation to remain stable.
Q3. To what extent do you see risk of late/non-payments from your company’s debtors developing during the next 12 months?
This marks a dramatic shift in attitude from last year’s survey:
- In 2019, just 16 per cent expected risks from debtors to increase
- Three-quarters expected the situation to remain stable.
The payment gap widens, and real estate and construction firms are hit the hardest
The ‘payment gap’ is the time between the agreed payment term and the actual duration of pay, and it is widening.
The payment gap widens, and real estate and construction firms are hit the hardest
The ‘payment gap’ is the time between the agreed payment term and the actual duration of pay, and it is widening.
Q9a. What payment terms (i.e. the period allowed to a buyer to pay off the amount due) do you specify to your customers, on average, in number of days?
Q9b. What is the average time taken by your customers to make their payments? (please answer in number of days)
Gap = Time take to pay (Q9b) - Payment terms (Q9a)
This puts businesses under pressure by reducing their liquidity, leaving them to search for alternative ways to free up cash. In our survey, over a third (35 per cent) of respondents are accepting longer payments than they feel comfortable with in order to avoid bankruptcy.
Q9a. What payment terms (i.e. the period allowed to a buyer to pay off the amount due) do you specify to your customers, on average, in number of days?
Q9b. What is the average time taken by your customers to make their payments? (please answer in number of days)
Gap = Time take to pay (Q9b) - Payment terms (Q9a)
Q9a. What payment terms (i.e. the period allowed to a buyer to pay off the amount due) do you specify to your customers, on average, in number of days?
Q9b. What is the average time taken by your customers to make their payments? (please answer in number of days)
Gap = Time take to pay (Q9b) - Payment terms (Q9a)
This puts businesses under pressure by reducing their liquidity, leaving them to search for alternative ways to free up cash. In our survey, over a third (35 per cent) of respondents are accepting longer payments than they feel comfortable with in order to avoid bankruptcy.
Do you agree that the widening gap between payment terms and duration of pay is a real risk to the sustainable growth of your business?
Do you agree that the widening gap between payment terms and duration of pay is a real risk to the sustainable growth of your business?
Do you agree that the widening gap between payment terms and duration of pay is a real risk to the sustainable growth of your business?
Businesses operating in the real estate and construction industry are the worst affected by the payment gap:
The construction sector has long been afflicted by late payments. Complex billing procedures and a lengthy payment chain mean that getting paid on time can be a challenge.
Now, the issue is becoming even more urgent because of the pressure that the pandemic is putting on the sector.
Yet few businesses are taking action against this growing problem.
Businesses operating in the real estate and construction industry that are the worst affected by the payment gap:
The construction sector has long been afflicted by late payments. Complex billing procedures and a lengthy payment chain mean that getting paid on time can be a challenge.
Now, the issue is becoming even more urgent because of the pressure that the pandemic is putting on the sector.
Yet few businesses are taking action against this growing problem.
© Intrum 2020
© Intrum 2020