According to estimates of entrepreneurs, companies are currently waiting for payments amounting to at least 10.5 trillion Euros. Additionally, for more than 80% of companies, late payment is inherently problematic for their business. These findings from INTRUM 2024 European payment report were presented to SMEunited members on 12 September.
INTRUM’s research across the EU shows that despite businesses becoming stronger this year, entrepreneurs remain concerned, especially due to the high borrowing costs. More than one third of companies indicated to ask for longer payment terms from suppliers or pay later than agreed. More than 4 out of 5 SMEs say they have been asked for longer payment terms than they are comfortable with. Overall, late payments remain a concern for businesses of all sizes.
According to INTRUM’s report, strengthening liquidity and cash flow still is a strategic priority for the vast majority of companies. Over 10 hours every week are lost to chasing late payments. This adds up to more than a quarter of the working year (73 days) that SMEs lose out on productivity due to late payments. Following EU’s commitment to competitiveness, fostering measures to improve payment behaviour is an indispensable starting point. Echoing Von der Leyen political guidelines, SMEunited insists chasing late payment is part of the administrative burden weighing on companies.
Companies that are paid late often also struggle to pay their suppliers on time. This vicious circle has been raised by SMEunited. Late payments are significantly hampering companies’ potential to compete and grow. Almost half of the companies are reluctant to invest in expanding their business due to the high cost of borrowing, while back-office problems such as managing payments and cash flow are further impeding growth. Since 2022, the Late Payment Directive is being increasingly used by companies, making it almost 1 out of 2 companies referring to it at least sometimes. However, payment practices have not significantly changed compared to the previous year. This is why SMEunited has been asking for a revision of the current legal framework.
Read more about payment behaviour in Intrum’s “European Payment Report 2024”
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