The EU Payment Observatory Annual Report 2024 makes uncomfortable reading for any UK exporters still doing business in Europe, as it shows that In 2023 the share of enterprises having problems because of late payments in the EU experienced its highest increase in the past five years, from 43% to 47%.
This means a return to 2019 levels of late payment, reversing the progress made during the pandemic years in battling the scourge of unpaid B2B invoices and making effective European Debt Collection more important than ever.
The State of (late) payment in the EU
You can read the full report here but in brief the report shows:
- In 2023, most Member States (21 out of 27) recorded a deterioration in the share of companies affected by late payments.
- In 12 Member States more than half of companies reported having issues because of late payments.
- Average payment periods seem to have deteriorated more on Business to Business (B2B) than on Government to Business (G2B) transactions.
- Larger companies remain less likely to pay on time in most Member States.
- Suppliers report an increase in average payment periods in 2023 for every considered sector.
- Over 30% of companies report that late payments result in them paying later to their own suppliers.
- Companies where exports account for between 0 and 50% of their turnover tend to face more issues with late payments.
- Late payments considerably hinder firms’ ability to access financial services and, conversely, difficulties in accessing finance that result in even more late payments.
- Late payments have a significant impact on firms’ investment decisions, negatively affecting their competitiveness.
- The fear of damaging business relationships is one of the main drivers of late payments, with 55% of companies indicating that they accept longer payment terms than they are comfortable with to avoid damaging the relationship with their clients.
This report makes for very sobering reading and shows that despite the best efforts of the EU more than half of companies are reluctant to escalate their late paid invoices for fear of ‘damaging their relationship’ with their customer.
Needless to say, we would argue that is it the late payment that has damaged the relationship and creditors need to stand by their payment terms and ensure that their customers understand the value of prompt and timely payment.
As European Debt Collection specialists Safe Collections is well versed in debt collection and B2B debt recovery across the EU so contact us today if you have issues with unpaid invoices anywhere in the EU.
Unfortunately it appears that even a decade after the introduction of European Union wide late payment directives late payment of commercial B2B invoices remains an on-going problem and one that will likely only be exacerbated by the recently announced tariffs in the USA.
