Companies in Greece, Italy, Spain and France are ready longer to be paid by clients and the issue is getting worse, including to the dangers of default as financial development weakens within the eurozone.
Euler Hermes, the commerce credit score insurer, checked fee occasions for firms in 36 superior economies final yr. It measured days gross sales excellent (DSO), which is the typical variety of days it took firms to be paid.
China was on the foot of the record with a median of 92 days however Greece, Italy, Spain and France have been all within the backside 10, with DSO figures that have been larger than they have been in 2017. New Zealand got here prime with a median of 47 days.
Marc Livinec, a sector adviser at Euler Hermes who compiled the info, stated: “DSO is an important indicator. Firms with excessive DSOs are extra dangerous — that’s why we’re very delicate to it.”
He added that firms in southern Europe have historically waited longer than their northern counterparts. “In Mediterranean international locations, firms are again to dangerous habits of being paid late. The lengthening of DSO might present a type of complacency. They aren’t anticipating the financial cycle.”
The economic system has been slowing in southern Europe earlier than a slight rebound within the first three months of this yr. In accordance with figures from the EU, development this yr can be slower than final yr in Italy, France and Spain.
Mr Livinec stated that firms must be reacting to the slowdown by demanding more durable fee phrases. “The principle threat for firms is that they don’t seem to be paid rapidly sufficient and should file for chapter as a result of they’re working out of money,” he stated.
Firms that promote to customers have extra management over fee occasions than people who promote to different companies, added Mr Livinec. In accordance with Euler Hermes’ analysis, DSO in retail firms all over the world was solely 30 days.
Companies within the electronics sector got here out worst, ready 89 days on common to be paid by their clients.
China got here backside of the record for the second yr in a row, though the figures for 2018 have been barely higher than they have been in 2017.
Mr Livinec stated that firms there have been in impact performing as shadow banks for purchasers who couldn’t get credit score by means of extra conventional routes. “[The figure] has not fallen for a number of years and it makes Chinese language firms extra fragile. The financial penalties could possibly be devastating.”
Euler Hermes forecast earlier this yr that insolvencies in China would rise at a sooner fee than in some other large international economic system in 2019 due to the financial slowdown within the nation.
Total, the worldwide common for DSO final yr was 65 days, at some point shorter than the 10-year excessive reached in 2017. The insurer expects that common to fall by one other day this yr as firms react to financial uncertainty by tightening their phrases.