Bad Debt and Late Payments

The credit management services group Intrum Justitia conducted a survey of almost 6,000 European businesses and found “significant differences” in how industry sectors are hit by bad debt and late payments.

Businesses in the transport and utilities sectors had significantly smaller write offs, with 2.3% of transactions and 1.5% of transactions respectively.

Intrum says European businesses have written off a record total €312bn (£268m) or 2.7% of all transactions, with professional services (for example accountants, law firms and the recruitment industry) hardest hit.

Professional services saw the largest increase in write offs from the 2010 report, up 12.5%. Transportation write offs are also increasing fast, 9.5% up from previous year.

The survey indicates that things will start turning worse before they turn for the better. Professional services are often first hit by client budget cuts, which means they serve as a warning of what may lie ahead. Unfortunately, history tells us that other industries are to show significantly higher bad debt next year.

“Although the picture painted in our report may seem grim there are measures companies can take to protect themselves. There is a lot that can be done to help businesses”.

At Amril we understand the problems businesses face and that implementing efficient credit policies get’s you paid earlier reduces your bad debt write-off’s.

No business wants to lose a customer, so will consider waiting longer, unfortunately this will have a detrimental impact on their cash flow and a greater chance of a bad debt.

Amril can help a business streamline their credit function and give them an ROI.

Speak to us, all matters relating to Credit Management are kept strictly confidential.

EPI 2011 Industry White Paper