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"The risk of non-payment has risen sharply in recent months"

The payment behavior of companies in Germany has deteriorated as a result of the increasingly tense economic situation.

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"The risk of non-payment has risen sharply in recent months"

The payment behavior of companies in Germany has deteriorated as a result of the increasingly tense economic situation. Suppliers and lenders are reporting an average payment delay in business-to-business transactions of 10.5 days for the first half of 2022, according to the current "Payment Indicator Germany" from the credit agency Creditreform, for which almost four million invoice documents were evaluated.

In the second half of 2021, the corresponding comparative value was 9.9 days. "Many companies are currently struggling with significant cost increases that are affecting earnings and liquidity," explains Patrik-Ludwig Hantzsch, Head of Economic Research at Creditreform.

In industrial sectors in particular, open receivables are increasingly being paid later, for example in the metal and electronics industry or in the chemical sector and with plastics manufacturers. And in logistics and in the construction industry, which has been showing the greatest delays for years anyway, payment behavior has recently deteriorated again. Creditreform is therefore sounding the alarm. "The risk of non-payment has risen sharply in recent months," warns Hantzsch.

Suppliers and lenders are already reacting and are no longer granting payment terms as long as in the past. According to the study, which takes place every six months, payment terms have been noticeably reduced, especially for invoice recipients from the retail, metal and electrical trades and the transport sector.

On average, customers are now only granted a payment period of 29.8 days, reports Creditreform. That is one day less than in the second half of 2021 and the lowest level since 2015. "Shortening the deadline is a means of accelerating the receipt of payments and minimizing the risk of defaults," explains Hantzsch.

Especially since there is always more money in the fire. In view of inflation and high production costs, the invoice amounts have been rising for several months. In addition, according to Creditreform, the recovery of business relationships after the expiry of corona restrictions also has an effect on the invoice amount.

On average, the overdue receivables between January and June 2022 were now 2107 euros. They were last higher at the beginning of the corona pandemic.

A good quarter of the outstanding receivables were attributable to small companies with fewer than 50 employees. The study shows that this proportion has increased noticeably, specifically by almost three percentage points. Conversely, the outstanding receivables of large companies - i.e. companies with more than 250 employees - have decreased.

Nonetheless, this corporate class remains the clear leader in these statistics. "Nevertheless, the credit management of suppliers and other creditors has to adapt to the new developments and needs more attention, especially now in the economic downturn," warns expert Hantzsch. "Small companies are becoming more important for receivables management."

Especially since the delay in payment by small companies is well above average at 12.1 days. Hantzsch recommends protecting even small transaction volumes against failures.

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