2023-08-02 15:02:34
Payment behavior in Germany continued to deteriorate in the first half of 2023. This is a result of the “Payment Indicator Germany” from Creditreform, collection service provider and credit agency, for which the company evaluates millions of invoices from its own accounts receivable register every six months. Suppliers and lenders have seen their customers’ late payments increase to an average of 10.77 days from 10.51 days in the first half of last year. “The past few months have been a stress test for many companies. Lenders, customers and business partners are also feeling this through increased bad debts,” says Patrik-Ludwig Hantzsch, Head of Creditreform Economic Research. Business was worse, while costs rose at the same time. The duration of the payment delay has thus returned to the level of the years 2019/2020. In 2021, this had decreased significantly.
The collection period also rose slightly to 40.70 days (40.31 days a year earlier). However, this is still below the level of the pre-Corona period. The collection period is the sum of the agreed payment target and default of payment. Many lenders have remained true to their strategy of setting short payment terms in order to minimize the risk of default. On average, customers were granted a payment term of 29.93 days, compared to 29.80 days in the prior-year period. At the beginning of the corona pandemic, on the other hand, payment terms of around 32 days were still common. The deteriorated framework conditions are forcing suppliers and lenders to reassess their risks, says Hantzsch. The priority now is to secure liquidity. For the current year, Creditreform is anticipating more payment defaults and follow-on insolvencies, since the economy is not expected to recover until next year.
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The average value of an invoice paid late increased by 6 percent to 2234 euros compared to 2107 euros in the first half of 2022. This is mainly a consequence of inflation. But defaulting debtors would also have increased their outstanding debts. Since several invoices were typically paid late at the same time, the volume of outstanding trade receivables rose to a level of almost EUR 22,000 per debtor in the first half of 2023 (same period in the previous year: EUR 20,400). A clear increase in the invoice value in the chemicals/plastics and transport/logistics sectors by 35 and 29 percent is striking.
More than 80 percent of all defaulting debtors were small businesses with no more than 50 employees, while only 8 percent were large companies with more than 250 employees. Small businesses also took more time to meet their payment obligations. Late payments were received an average of 13.35 days late, compared to just 9.37 days for large companies. Due to the high interest rates, liquidity has recently become very expensive.
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