SMEs write off 3 per cent of payments as bad debt

10 May 2010

10 May 2010 | Lindsay Clark

European companies have written off late payments worth €300 billion (£260 billion), according to credit management services company Intrum Justitia.

This figure, which has risen 8 per cent on 2009, shows the extent to which the recession is still hitting suppliers and buyers. The research says that European SMEs are the hardest hit by the rise in non-payment. Three per cent of all their transactions across public authorities, businesses and consumers have to be written off as bad debt, it says.

“With many European governments continuing to prop up their economies with cash injections, this €300 billion wastage figure is truly worrying,” said Lars Wollung, chief executive of Intrum Justitia. “In particular it is extremely troubling to see how hard hit the SME market has been by non-payment and the lack of confidence that conditions will improve over the coming months. With banks continuing to lend cautiously, good cash flow management – which includes taking decisive action when faced with late or non-payment – is vital to help ensure the very survival of many European small and medium-sized businesses.”

Intrum Justitia’s European Payment Index also shows that 60 per cent of all businesses would have liked to see the recently revised European Late Payment Directive extended to cover consumer payments, with 58 per cent saying that such an extension would significantly improve their business conditions.

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