In the course of the summer, credit management company Intrum published its European Payment Report 2022, which gives on overview of the late payment landscape across Europe. EBC had the chance to dive into the findings of the report during an event co-organized by SMEunited and Intrum.
The report outlines how late payments impact the business outlook of more than 11,000 companies across Europe, 5% of which were construction companies. This year’s key findings notably highlight that stagflation fears create unease to the market although the spirit of growth is persevering, businesses expect their cash flows to suffer but lack the agility and expertise to manage the impact, and prompt payments are playing a central role in environmental, social, and corporate governance (ESG).
As mentioned during the event, 6 out of 10 businesses are more hesitant when it comes to taking on more debt. SMEs are also faced with a significant skills gap that impedes their growth. The findings show that 58% of companies do not know how to deal with inflation. 6 out of 10 companies are worried that the risk of late payment will grow this year. Therefore, companies expect their cash flows to suffer. Not only because of inflation but also because they expect the crisis to lead to more late payments. Strikingly, only 3 out of 10 companies get paid within the 30 days, the limit in principle mandated by the Late Payment Directive; in reality, too many loopholes result from the inadequate framework in place, notably the problematic concept of “grossly unfair”.
The findings of the report confirm EBC’s long-standing position that late payment creates disruptions for SMEs that can result in severe impediments for their activities and the job market. A revision of the outdated framework on late payment, governed by the Late Payment Directive (2011/7/EU) has become even more pressing given the current inflationary environment and broader crisis stemming from the consequences of the war in Ukraine and the Covid-19 pandemic.