Late payments will increase in the coming months

In France, in the space of one year, payment delays between companies have increased from 11 to 17 days, while those of public services to companies have exploded from 9 to 23 days, according to Intrum.

Businesses are expecting a further increase in late payments this year, driven by unprecedented inflation and a sharp rise in interest rates.

The majority of companies say they do not have the experience to cope. More than half feel that rising prices are preventing them from growing, paying suppliers and meeting wage demands.

Non-compliance with payment deadlines accounts for a quarter of French business failures. Faced with this situation, strengthening company liquidity is becoming a strategic priority for 2022.

The Cabinet ARC has conducted a study with IFOP on the payment terms of French companies in the first half of 2022. The study highlights that 70% of the companies surveyed do not expect their business to grow in the next 6 months and 21% even fear a decline. Almost 50% of the companies surveyed say they will need two years to erase the effects of the health crisis on their financial health, compared to almost 40% who say it will take at least three years. More than a third of the companies believe that they will not be able to cope with this and will not be able to repay the accumulated receivables, investments and invoices.

As a result, payment terms are likely to become the only variable on which companies will be able to play to alleviate cash flow problems. Massive state aid will most certainly be history as debt financing, which exploded during the Covid, will become increasingly complicated.

Companies can therefore only rely on themselves and their ability to manage their accounts receivable and improve the cash flow.

Date: 06-30-2022 - Author: Tatiana Arragone
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