Intrum Justitia

Information Requests 2008-11-24

European Industries need survival plan to cope with late payments fast

The European business community is missing out on a record amount of minimum 250 billion Euros as a consequence of outstanding invoices. This amount is almost equal to the domestic product of Belgium. Certain industries face much higher written off percentages than average and small companies are struggling getting paid.

Late payment of invoices 55.5 days on average in Europe
Professional Services, Construction & building & education industry have the highest written off percentages
Smaller companies suffer from cash flow irregularities and high written off percentages

Industries that particularly suffer from late and / or non payment are the professional services industry (lawyers, accounting firms, and solicitors), construction and building industry, education industry (schools, universities, educational material suppliers) and the media industry. These industries have a more then average written off percentage in the business to business arena. The average European written off percentage is 2,0%.

The most important reasons for non payment or late payment lie in inadequate routines and lack of competence of the business community itself when it comes to collecting invoice payments. Michael Wolf, CEO and President of Intrum Justitia Group, finds this worrying. “Businesses are allowing themselves to be blinded by the good economic situation of the past years. In addition they find it awkward to address their customers on the subject of their payment behaviour. They have lost sight of the fact that the banks are responding to the credit crunch by becoming more difficult and expensive when it comes to providing loans.

Intrum Justitia finds that it is absolutely crucial for the business community to take a much stronger line on implementing credit management from front to end. Large businesses are the first to start to pay more slowly. Smaller businesses are forced to follow suit. This has dramatic effects on economic development; forward propulsion is lost because investments are postponed. Company cash is ‘frozen’ in unpaid invoices and borrowing from banks continues to be difficult and costly. All of this can be avoided by good credit management.

For further information, please contact:

Sales & Marketing Department

Jakub Leja - Sales & Marketing Director,
tel. 0 502-188-306;
jakub.leja@intrum.pl