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European Payment Report 2020
Regional overview
European Payment Report 2020
Regional overview
Northern Europe
A pan-European recession is set to have a severe impact on business, but companies are looking to increase M&A activity
Respondents in Northern Europe are concerned about how a recession will affect their businesses: 41 per cent expect it to have a severe impact – the second highest after Southern Europe.
Nordic fears Swedish and Finnish respondents are most concerned: 45 per cent expect the impact of a recession to be severe.
Despite its ‘soft’ lockdown, Sweden’s annual GDP is expected to shrink by 7 per cent in 2020. And, in Finland, where the export-led economy closed to near standstill due to the lockdown imposed in mid-March, GDP is expected to fall by 6 per cent in 2020.
Getting prepared But businesses in Northern Europe are already taking steps to prepare themselves for the economic fallout:
- 19 per cent plan to conduct more mergers and acquisitions (M&A) in preparation for a downturn – the highest percentage in Europe.
Northern Europe
A pan-European recession is set to have a severe impact on business, but companies are looking to increase M&A activity
Respondents in Northern Europe are concerned about how a recession will affect their businesses: 41 per cent expect it to have a severe impact – the second highest after Southern Europe.
Nordic fears Swedish and Finnish respondents are most concerned: 45 per cent expect the impact of a recession to be severe.
Despite its ‘soft’ lockdown, Sweden’s annual GDP is expected to shrink by 7 per cent in 2020. And, in Finland, where the export-led economy closed to near standstill due to the lockdown imposed in mid-March, GDP is expected to fall by 6 per cent in 2020.
Getting prepared But businesses in Northern Europe are already taking steps to prepare themselves for the economic fallout:
- 19 per cent plan to conduct more mergers and acquisitions (M&A) in preparation for a downturn – the highest percentage in Europe.
Q6: You answered that your country is either in a recession, or you expect one within 5 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?
We plan to conduct M&A
M&A can be a useful tool in an economic downturn. Companies may look to sell off non-core parts of their business to free up cash, while those with relatively strong balance sheets will take advantage of lower valuations. In this way, companies can use M&A to position themselves for growth post-crisis.
Q6: You answered that your country is either in a recession, or you expect one within 5 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?
We plan to conduct M&A
M&A can be a useful tool in an economic downturn. Companies may look to sell off non-core parts of their business to free up cash, while those with relatively strong balance sheets will take advantage of lower valuations. In this way, companies can use M&A to position themselves for growth post-crisis.
Central Europe
Debtors paying after the due date are less problematic than in other regions, but administrative inefficiencies are a burden
Respondents from Central Europe are the least affected by late payment: 22 per cent say that debtors paying after the set due date are highly problematic – below the European average of 25 per cent.
Belgium counters late payment Belgium’s businesses are the least affected by late payment:
- 42 per cent say that debtors paying after the set due date is not a problem
- Across Europe, it is 29 per cent.
There is a possible explanation for this. In April 2019, the Belgian government passed a law intended to combat late payment to SMEs. Under the law, the legal payment period for a commercial transaction between enterprises is 30 calendar days, unless agreed between parties.
Central Europe
Debtors paying after the due date are less problematic than in other regions, but administrative inefficiencies are a burden
Respondents from Central Europe are the least affected by late payment: 22 per cent say that debtors paying after the set due date are highly problematic – below the European average of 25 per cent.
Belgium counters late payment Belgium’s businesses are the least affected by late payment:
- 42 per cent say that debtors paying after the set due date is not a problem
- Across Europe, it is 29 per cent.
There is a possible explanation for this. In April 2019, the Belgian government passed a law intended to combat late payment to SMEs. Under the law, the legal payment period for a commercial transaction between enterprises is 30 calendar days, unless agreed between parties.
Q4: What do you foresee as the major challenges facing customers paying on time and in full over the next twelve months?
Administrative inefficiency of our customers
Administrative inefficiencies cause bottlenecks Over a third (35 per cent) of Central European respondents cite administrative inefficiency of customers as one of their top three challenges to payment over the next year – the highest percentage across all European regions.
Q4: What do you foresee as the major challenges facing customers paying on time and in full over the next twelve months?
Administrative inefficiency of our customers
Administrative inefficiencies cause bottlenecks Over a third (35 per cent) of Central European respondents cite administrative inefficiency of customers as one of their top three challenges to payment over the next year – the highest percentage across all European regions.
Eastern Europe
Unsecured loans are a problem for payments, and late payments threaten survival
Unsecured business loans are a lifeline for many small businesses, but overreliance on this financing tool can be a challenge to timely payment.
Unsecured loans come with higher interest rates than high street bank loans or secured business loans, and can directly affect credit ratings. Businesses whose partners depend on unsecured loans can see their growth ambitions affected.
Eastern Europe
Unsecured loans are a problem for payments, and late payments threaten survival
Unsecured business loans are a lifeline for many small businesses, but overreliance on this financing tool can be a challenge to timely payment.
Unsecured loans come with higher interest rates than high street bank loans or secured business loans, and can directly affect credit ratings. Businesses whose partners depend on unsecured loans can see their growth ambitions affected.
Q4: What do you foresee as the major challenges facing customers paying on time and in full over the next twelve months?
An over-reliance on unsecured loans among our business partners
Threats to growth – and survival Compared with respondents from other European regions, those in Eastern European are most likely to:
- say that business partners’ overreliance on unsecured loans is going to be one of their top three challenges to payment over the next year (31 per cent)
- have their survival threatened by late payment (42 per cent).
Q4: What do you foresee as the major challenges facing customers paying on time and in full over the next twelve months?
An over-reliance on unsecured loans among our business partners
Threats to growth – and survival Compared with respondents from other European regions, those in Eastern European are most likely to:
- say that business partners’ overreliance on unsecured loans is going to be one of their top three challenges to payment over the next year (31 per cent)
- have their survival threatened by late payment (42 per cent).
Southern Europe
Risk of late payment is the highest in Europe – and is set to rise further
Debtors missing payment dates is a particular concern for Southern European respondents. The Covid-19 crisis has increased the pressure that businesses are under, as they struggle to maintain a healthy cash flow amid a potential decrease in revenue.
Over half (53 per cent) say that debtors in financial difficulties is going to be one of their top three payment challenges over the next year – the highest across all regions, and well above the European average of 38 per cent.
The situation is not expected to improve:
- 57 per cent of Southern European respondents expect the risk of late payment to increase over the next 12 months
- The European average is 43 per cent.
Southern Europe
Risk of late payment is the highest in Europe – and is set to rise further
Debtors missing payment dates is a particular concern for Southern European respondents. The Covid-19 crisis has increased the pressure that businesses are under, as they struggle to maintain a healthy cash flow amid a potential decrease in revenue.
Over half (53 per cent) say that debtors in financial difficulties is going to be one of their top three payment challenges over the next year – the highest across all regions, and well above the European average of 38 per cent.
The situation is not expected to improve:
- 57 per cent of Southern European respondents expect the risk of late payment to increase over the next 12 months
- The European average is 43 per cent.
Q3: To what extent do you see risk of late/non-payments from your company’s debtors developing during the next 12 months?
Increase
Q3: To what extent do you see risk of late/non-payments from your company’s debtors developing during the next 12 months?
Increase
© Intrum 2020
© Intrum 2020