INTRUM AB - Two in five (41%) European businesses plan to cut costs this year, up from 28% in 2021 to the highest level seen the outbreak of the Covid-19 pandemic, despite opportunities ahead
- One in three (34%) businesses are more likely to request longer payment terms from suppliers, or pay later than agreed
- Businesses are losing more than a quarter of the working year (73 working days) chasing late payments*
- European business are owed €10.5 trillion in outstanding payments (30% of total GDP and equivalent to the combined GDPs of
France ,Germany and theUK )
Two in five (41%) businesses across
The 27th edition of Intrum's annual study assesses the fortunes of 9,255 companies across 25 European countries. It sheds light on the myriad of challenges they face after an unrelenting 18 months of economic headwinds.
After a recent period dominated by economic instability and the cost-of living crisis, economic conditions are improving in
Still, macroeconomic conditions continue to cast a long shadow. Three in five (61%) respondents do not expect interest rate reductions for at least another year, despite suggestions that the
To navigate this testing outlook, the percentage of firms planning cost-cutting measures has increased for a third successive year, from a low of 28% in 2021 to 41% now. More than one in three (34%) businesses are more likely to request longer payment terms from suppliers, or pay later than agreed. A further 15% of businesses say they will begin extending payment terms in 2024 to navigate the economic disruption and downturns.
At the same time, almost one in ten (8%) are looking to reduce the payment terms they offer their own clients or customers to help manage cashflow.
Table 1: New corporate actions planned for 2024 to manage economic disruption and downturns
| 2020 | 2021 | 2022 | 2023 | 2024 | |
| We plan to cut costs | 38% | 28% | 33% | 37% | 41% |
| We plan to be more cautious about taking on financial debt | 34% | 22% | 23% | 22% | 20% |
| We plan to cut down on recruitment | 29% | 16% | 16% | 14% | 15% |
| We plan to sell-off part of the company | 18% | 9% | 9% | 7% | 8% |
| We plan to grow by conducting Mergers & Acquisitions | 15% | 9% | 8% | 7% | 8% |
| We plan to increase our investment in product innovation and development to become more competitive | - | 7% | 10% | 11% | 10% |
| We will ask suppliers for longer payment terms than in the past | - | - | - | 13% | 15% |
| We will reduce the payment terms we offer clients/customers | - | - | - | 8% | 8% |
| We will offer employees voluntary redundancy | - | - | - | 7% | 8% |
| We will make compulsory redundancies in our workforce | - | - | - | 6% | 6% |
Across
However, Intrum's research highlights the negative impact of longer payment terms, or debtors simply not paying, as businesses spend significant time chasing down late payments.
Across
Table 2: Countries where businesses are most likely to request longer payment terms from suppliers
| Country | Percentage |
| 20% | |
| 19% | |
| 17% | |
| 17% | |
| 16% | |
| 16% | |
| 15% | |
| 15% | |
| 14% | |
| 13% | |
| 13% | |
| 12% | |
| 8% |
European businesses are currently owed E10.5 trillion - 30% of total GDP and equivalent to the combined GDP of
Looking at amounts owed by sector, organisations in government and the public sector have the biggest outstanding amounts (E5,135 million), followed by banking and financial services (E3,782 million) and insurance (E2,813 million ).
"It's troubling to see that cost-saving challenges are piling up for thousands of businesses in 2024, to a greater extent than at any time in the last five years. Businesses having to cut costs and ask for longer payment terms from suppliers while insolvencies are increasing is a concerning trend.
It is understandable that executives are nervous in the aftermath of recent years' challenging economic environment. We must help businesses to manage and recoup the money they are owed and encourage suppliers and customers to pay on time, to avoid putting growth on hold and necessitating cost cutting measures to survive the current headwinds.
Governments and industry alike must take steps to make sure that businesses are being supported and on time payments encouraged in order to avoid disrupting businesses' cash flow and their ability to pay their debts. Without doing so, the problem only escalates and creates a cycle of unresolved credit commitments."
ENDS
Notes to Editors
*10.15 (hours a week) x 52 weeks = 527.8 hours a year. This divided by the average number of working hours in a day (7.28) = 72.5 days, rounded to 73 days.
The full report is available as of
About The European Payment Report 2024
The European Payment Report 2024 is an instrument for gaining insight into the payment behaviours of European businesses and examines trends related to late payments, invoice payment practices and overall financial risk. The report is based on an external survey conducted by FT Longitude in 25 countries in
For more information, please contact:
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kristin.andersson@intrum.com
Intrum is the industry-leading provider of Credit Management Services with a presence in 20 markets in
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