European businesses are preparing for a historic recession

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Intrum is today publishing the full European Payment Report*, following the summer’s special whitepaper edition on the negative financial disruption mostly caused by the Covid-19 pandemic. The results show shaken European economies and business operations that are brought to a halt in many sectors.

Almost six in ten respondents say a Pan-European recession is a top three challenge when it comes to consumers paying on time over the next twelve months.

- Businesses are now taking necessary steps to prepare for a recession caused by the pandemic. Decreased revenues have reduced businesses’ cash flow and increased pressure on their outgoing payments. The initial impact on the European payments landscape continues to be dramatic, says Mikael Ericson, President and CEO of Intrum.

Cutting costs and cutting down recruitments

In the report, two measures among European companies clearly stand out. In order to protect their business in preparation for a recession and an economic upheaval, 38 per cent of respondents plan to cut costs, while 35 per cent will be more cautious about debt. 29 per cent say they are looking to cut down on recruitment to prepare for a recession, compared to 18 per cent in 2019.

The payment gap is widening

Businesses are prioritising their payment practices to find solutions. Despite all good efforts being done, the payment gap is widening across Europe. The estimated time between the agreed payment term and the actual duration of pay is now 14 days compared to 6 days in 2019 in B2B corporate payments.

More than four in ten respondents (43 per cent) see risk from debtors increasing over the next twelve months and 19 per cent say it will increase significantly. Businesses are under increasing pressure by reduced liquidity, leaving many of them to search for alternative ways to free up cash.

Nearly half (46 per cent) say the widening gap is a real risk to the sustainable growth of their business. During the crisis, more than half (51 percent) said that late payments threatened a liquidity squeeze for their business, compared to 35 percent of those surveyed before the crisis

- The widening payment gap is a growing concern for business as it pushes them into unnecessary difficult financial positions. Left unchallenged, it might take European businesses more time to rebound financially than European governments, says Ericson.

Real estate and construction hit hardest by late payments

A recession will hit industries in different ways. The report highlights that businesses in the real estate and construction sector have been hit hardest by late payments. 41 per cent of these businesses say they now have accepted longer payments to avoid bankruptcy, whereas the European average is 35 per cent.

At the same time, as previously reported, companies within hospitality and leisure still struggle with different government restrictions across Europe. Within this sector, four in 10 respondents (42 per cent) say that a recession will have a severe impact on their businesses – the highest figure of the 11 industries Intrum surveyed.

* Intrum has gathered data from 9,980 companies across 29 European countries covering 11 industry sectors. The survey was conducted during February to May 2020 (pre and during Covid-19).

Download the report here
The full report will be available on September 28th here: www.intrum.com/epr2020

For further information, please contact:
 Niclas Strahner, PR & Media Relations Director
Tel: +46 73 425 88 90
ext-niclas.strahner@intrum.com

Anna Fall, Chief Brand & Communication Officer
Tel: +46 70 996 98 21
 

Intrum is the industry-leading provider of Credit Management Services with a presence in 24 markets in Europe. Intrum helps companies prosper by offering solutions designed to improve cash flows and long-term profitability and by caring for their customers. To ensure that individuals and companies get the support they need to become free from debt is one important part of the company’s mission. Intrum has circa 10,000 dedicated professionals who serve around 80,000 companies across Europe. In 2019, revenues amounted to SEK 16.0 billion. Intrum is headquartered in Stockholm, Sweden and the Intrum share is listed on the Nasdaq Stockholm exchange. For further information, please visit www.intrum.com.

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