This is bad news for the business. The payment terms for businesses recorded their biggest increase in 2023 since 2008. Extending by three days, last year it reached an average of 59 days, indicates a study by Allianz Trade. “
This means that more companies are waiting longer to be paid, which increases the risk of
cash flow problems
,” specifies the credit insurer.
Globally, 42% of companies had payment terms longer than 60 days at the end of 2023. By region, the United States fared the best with only 33% of companies having to wait more than two months to be paid. Conversely, in Asia, 46% of them are affected by these long delays. Europe, where 6% of companies are paid in less than 10 days and 41% in more than 60 days, is in line with the global average. But the differences between countries are significant, indicates Allianz Trade. As always, “
the payment period is shorter in Germany, the Netherlands and the Nordic countries than in those in the South, particularly in France, Spain and Italy
”.
Also read Payment deadlines: with the crisis, business leaders are having difficulty getting paid
Almost all sectors concerned
The situation has deteriorated for almost all of the 22 sectors monitored by Allianz Trade. The working capital requirement (WCR), which provides information on the cash flow gap in a company's current activity, is also increasing. It reaches 76 days of turnover in 2023, compared to 74 in 2022, “
under the effect of slowing growth and increasing operating and financing costs
”. A glut of stocks also pushed the WCR upwards in different sectors. It reaches 114 days for transport equipment or electronics and exceeds 90 days in textiles, pharmaceutical products or metals.