New Germany Corporate Payment Survey 2016
DESPITE THE SOLIDITY OF GERMANY’S ECONOMY, PAYMENT DELAYS ARE STILL COMMONPLACE
- 84% of German companies experience delays in payments, with export companies the most affected
- On a cross-sector average, payment delays correspond to 41.4 days
- For over 3/4 of German companies, the maximum delay is 60 days - lower than in China
- 84.4% of companies grant credit periods. While 20% report reduced outstanding receivables, 16.9% have seen a rise
- Mixed picture across business sectors. Textiles/Leather/Clothing is the most severely affected, at 94.4%
Coface’s first German payment survey, conducted among over 850 participant companies, reveals that, despite the country’s solid economic situation, nearly 84% of companies are affected by delays in their customers’ payments. Nevertheless, the positive situation of German companies is reflected in the fact that they have seen a slight reduction in the financial volumes of outstanding receivables over the past year. Payment delays, for the companies surveyed, remain within manageable time periods. Potential liquidity risks, arising from very long overdue receivables, are thus relatively low.
PAYMENT DELAYS: GERMAN COMPANIES IN BETTER SITUATION THAN THEIR CHINESE COUNTERPARTS
Payment delays are a regular occurrence for 83.7% of companies. Over half of these delays are due to financial difficulties experienced by customers. This is higher than the share reported in China, according to a recent Coface survey. Around 80% of Chinese companies are experiencing payment delays, while in the Asia Pacific region, the proportion is even lower, at just 70%. In Germany, payment delays are more frequent for companies that are mainly dependent on exports, at nearly 90%, while companies trading on the German domestic market report 82.8%. Compared with the previous year, the size of outstanding receivables shows a downward trend. Around 20% of the companies surveyed report reduced outstanding receivables, while 16.9% have seen a rise. For over 60%, the level of outstanding receivables remains unchanged.
Export-oriented companies show more mixed results - but a positive trend, with over 24% reporting a reduction in the amount of outstanding receivables. However, 23.3% have seen a considerable rise in outstanding receivables – compared to the average value, for all companies, of 16.9%.
From a temporal perspective, payment delays remain within manageable limits. For over three quarters of German companies, the maximum length of payment delays is 60 days. Thus, the situation for German companies is clearly better than that of their Chinese counterparts. In the Coface Payment Survey for China, the share of payment delays of up to 60 days was 60%, while the proportion of payments of over 150 days amounted to 10%. This latter figure has almost doubled within the last year, due to the cooling of economic growth in China. This 10% share of long overdues in China clearly exceeds the amount of 2.5% seen in Germany. German companies focussing on the domestic market report only 1.9% of long overdues, while export-oriented companies show a distinctly higher value, at 7%.
For German enterprises as a whole, the potential liquidity risks arising from outstanding receivables with delays of six months or more, remain within manageable limits. Coface’s experience has shown that around 80% of outstanding receivables will not be fully paid, once the payment delay exceeds six months. The liquidity of companies can become questionable when they have outstanding payments equal to more than 2% of their annual turnover.
DELAYS IN PAYMENTS WIDELY SPREAD ACROSS ALL SECTORS
Across the 13 sectors examined, the average share of companies suffering from delays in payments is 83.7%, with ranges of around 10 percentage points above and below. Clearly distanced from the other sectors, Textiles/Leather/Clothing is the most severely af