CM September 2020

%
0,6
0,5
Pre- crisis
Late During payment
crisis
hits European liquidity
average,
The impact of late payments on business areas (high impact*)
European average, Covid-19 break down:
6 EPR 2020 Special Edition Covid-19 White Paper
European Pre-crisisaverage,
COVID-19 break down:
During crisis
Pre-crisis During crisis
51%
The Our risk survey of a finds that the most pressing concerns for European
41%
pan-European recession businesses in terms of late payment are a reduction in liquidity
and their ability to survive: 45 percent say that late payment
reduces their liquidity, and 38 percent say it threatens their
Debtors in financial difficulties survival.
38%
The impact of late payments on business areas (high impact*)
Spain’s economy has been hit hard by the crisis: the Bank of
Spain has predicted that GDP could drop by 13 percent this
year, 4 and the shrinking economy is putting many jobs at risk.
At 14 percent, unemployment was already a major concern
OPINION before the crisis hit. Now, it is expected to reach 19 percent by
the end of the year. 5
AUTHOR – Heather Greig-Smith
What do you foresee as the major challenges facing customers paying on time and in full over the next
What
twelve
do you
months?
foresee as the major challenges facing customers paying on time
and European in full average, over the Covid-19 next break twelve down: months?
COVID-19 break down:
Pre-crisis
The Covid-19 crisis has placed an even greater 38%
During crisis
pressure on
European businesses to safeguard their liquidity. Sharp drops in
An uncertain trading environment
GDP across Europe are pushing down 33%
(Global trade wars/Middle Eastern conflict)
revenues for businesses,
restricting cashflow while increasing pressure 33% on businesses to
manage their cash and liquidity more efficiently.
An over-reliance on unsecured loans
28%
among our business partners A decline in consumer demand following government lockdown
measures presents a long-term 28% challenge to European
businesses. As they look to save costs through reducing headcount,
of this may in turn negatively impact consumers’ 37% ability to
Administrative inefficiency
our customers pay invoices due to lower disposable income.
28%
45%
This trend is reflected in our survey. Over half (51 percent) of
Disputes regarding goods respondents and say that late payment reduces 36% their liquidity
services delivered during the Covid-19 crisis, compared
27%
with 35 percent of those
surveyed before the impact was felt. Businesses that are
Intentional ignorance
able to safeguard their liquidity will emerge stronger from the
29%
Covid-19 crisis, while those with less liquidity to fall back on
say that late payment reduces their liquidity, and
38% say it threatens their survival.
may find themselves under threat. 27%
“Awareness of the
impact of late payment
and the options open
to businesses under
EU and UK legislation
is important. These
and further voluntary
initiatives will be
essential in ensuring
steady cashflow for
businesses as we
emerge from the
immediate crisis.”
Intrum UK Managing
Director Eddie Nott.
A lack of business experience
among customers
Legislation issues
None
26%
24%
66%
0,0 0,1 0,2 0,3 liquidity 0,4 0,5 will 0,6 emerge 0,7
4) Spain predicts unemployment will reach 19 percent, Politico, May 2020 www.politico.eu/article/spain-predicts-coronavirus-covid19-unemployment-will-hit-19-percent/
5) Ibid.
2%
1%
25%
26%
Businesses that are
able to safeguard their
stronger from the crisis,
while those with less
liquidity to fall back on
may find themselves
under threat.
0,4
0,3
35%
36%
39% 38%
33%
32%
34%
34%
31% 32% 31% 32% 33%
0,2
25% 25%
*On a scale from 1-5,
4 and 5 is defined as
“high impact”.
0,1
0,0
Liquidity
squeeze
Threat to
survival
Not hiring new
employees
Loss of
income
Additional
interest
charges
Dismissing
employees
Prohibiting
growth of the
company
Prohibiting
innovation
* On a scale from 1-5, 4 and 5 is defined as “high impact”.
Advancing the credit profession / www.cicm.com / September 2020 / PAGE 14
10 EPR 2020 Special Edition Covid-19 White Paper