Late payment costs European companies 350 billion euros
Baku, May 14 (AZERTAC). European companies lost 350 billion euros ($450 billion) last year due to late or unpaid bills, underlining fears that small businesses expected to drive economic recovery are faltering in a prolonged recession.
The figure amounted to 3 percent of all receivables and was a 7 percent increase on 2012, when companies wrote off 340 billion euros, Swedish credit management services group Intrum Justitia`s European Payment Index showed on Monday.
Against the backdrop of the economic downturn and restricted bank lending in Europe, experts fear that the mountain of unpaid bills will drive up insolvency and job losses, reduce cross-border trade and snuff out any recovery.
Late or non-payment for services has long been a problem for Europe`s smaller companies, especially in businesses such as supermarkets, which are renowned for driving hard bargains and squeezing suppliers.
The Forum of Private Business (FPB), a British-based organization that supports small and medium enterprises, last year outed supermarket chain Sainsbury on its late payment “Hall of Shame” for stretching payment times to 75 days.
Pharmaceutical giant GlaxoSmithKline received the honour in February for pushing the wait to be paid to up to 95 days.
The index, based on a survey of 9,800 companies in 29 countries in Europe, reflected the gap between economies in the north and those in the south.
Businesses in Greece, Cyprus, Hungary and Portugal were among the most at risk from the effects of late or unpaid bills, while Nordic nations, along with Germany, Switzerland and Austria, were least in danger.
However, Lars Wollung, president and chief executive of Intrum Justitia Group, a credit advisor, debt collector and financial services firm, said weaker confidence indicated a bleak outlook for the whole of Europe.
The payment index showed that even in Germany, some 30 percent of German businesses said they expected to face greater risks from late payment in 2013, a 33 percent leap compared to 21 percent from a year ago.
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