Risks of late payments likely to increase say business managers

• A disappointing fact for the hopes for an economic recovery in Europe is that 46 per cent of European business managers predict increased risks of late payments in the coming 12 months, according to Intrum Justitia’s 10th annual survey European Payment Index (EPI 2014). Business managers in Germany, France, Spain and Poland are more pessimistic than they have been in five years.

• The national trends are diverging with many low-risk countries reporting fewer risks ahead, while the majority of business managers in high-risk countries believe it will get even worse during the rest of 2014.

The highest risk forecasts were expressed in Portugal where 82 per cent of the managers predict that the risk for late payments will increase during 2014, with high numbers also for Greece (74%), Romania (73%), Spain (65%) and Italy (65%).

Nordic countries such as Denmark, Norway and Sweden are low-risk countries for credit managers and in those countries very few business managers claim that the risks are likely to increase. But Finland moves in the opposite direction: their business managers are more pessimistic than they have been in five years with 40 per cent predicting more risk of late or non-payment.

- Europe’s recession may well be over officially, but it continues to have a dire impact on businesses, communities and people within and beyond the European Union. Generally business managers are more pessimistic about their risk forecasts than they have been since 2009 which was a year with extreme uncertainty regarding the future. It is of vital importance that businesses have credit management processes in place in order to secure liquidity and rebuild business confidence, comments Lars Wollung, President & CEO of Intrum Justitia.

In the report Intrum Justitia lists what measures businesses can take in order to improve their cash flow and prevent bad debt losses:

1. Create, continuously develop and implement a balanced and solid credit policy to manage your risks and growth
2. Measure and follow up on the capital employed in your credit management process to reduce cost of capital
3. Make sure you know the customer you are doing business with
4. Write a clear contract with your customer stating your terms of business
5. Integrate sales, marketing and financial departments, and create an efficient invoicing process to avoid defaults
6. Monitor economic and industry information, including solvency of key customers, and regularly check customer addresses
7. Reduce customer losses and strengthen customer relationships by tailoring your credit process based on payment behavior and ability to pay
8. Implement swift reminders and charge default interest when possible
9. Balance your customer structure based on risk and growth potential
10. Act immediately to get paid, don’t delay

Click here to access the full report, with detailed statistics and a video with comments by President & CEO, Lars Wollung >>

About Intrum Justitia
Intrum Justitia is Europe’s leading Credit Management Services (CMS) group and offers services designed to measurably improve clients’ cash flows and long-term profitability, including purchase of receivables. Founded in 1923, Intrum Justitia has some 3,600 employees in 20 countries. Consolidated revenues amounted to around SEK 4.6 billion in 2013. Intrum Justitia AB has been listed on NASDAQ OMX Stockholm since 2002. For further information, please visit www.intrum.com
 
About Intrum Justitia European Payment Index
The survey was conducted simultaneously in 31 European countries between January and March 2014. The survey was conducted in written form and more than 10,000 companies responded. The questionnaire was translated into the respective national languages. Dispatch and return of the questionnaires was carried out on a decentralised basis by the countries concerned, whereas the analysis was carried out centrally in accordance with pre-determined guidelines. All information has been verified and uncertainties were not included in the evaluation. Furthermore, all anonymously sent questionnaires were not taken into account for the final evaluation. Companies in UK, Ireland, Greece, Cyprus, Lithuania, Latvia, Serbia, Bosnia, Russia and Turkey were also questioned on-line by a specialised company (BING Research).

For further information, please contact:

Madeleine Bosch, Head of EPI Research, Intrum Justitia
Tel: +31 64 6212 579
Email: m.bosch@intrum.com