Companies across Europe have written off €300bn (£261bn) in the last year due to late payments, according to new research.
The figure was reached in a survey conducted by Intrum Justitia Group, a Swedish-based debt buyer, which questioned over 6,000 European businesses. The survey also found that the value of written off debt across Europe had risen by €30bn in the last 12 months, while 2.6 per cent of all transactions were written off in the last year compared to 2.4 per cent the previous year.
Just 10 per cent of businesses believed conditions would improve in the next 12 months, and over half (52 per cent) of respondents said they were not confident of support from banks after the recession.
The research found that in the UK, the number of invoices being paid on time within 30 days declined by five per cent in the last 12 months, though the percentage of written off debt remained at 2.4 per cent. This had a direct impact on 54 per cent of respondents, who reported reduced liquidity as a result of late payments, while 41 per cent were not confident of being able to secure funding or support from the banks. The majority of UK respondents believed the risk of late payment would remain unchanged in 2010.
Lars Wollung, chief executive officer of Intrum Justitia, said: “With many European governments continuing to prop up their economies with cash injections, this €300bn wastage figure is truly worrying.
“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.”
The average delay in payments made after 30 days decreased in the UK across consumer, business and public authority sectors. In 2009 the average delay in consumer payments was 18 days, which dropped to 16 days in 2010. Average delays in business payments dropped to 18 days compared to 20 the previous year, while public authority payment delays dropped to 19 days in 2010 from 20 days in 2009.
Wollung added: “With banks continuing to lend cautiously, good cashflow management – which includes taking decisive action when faced with late or non-payment is vital to help ensure the very survival of many small and medium-sized businesses.”