According to Intrum’s annual European Payment Report, businesses are struggling to manage the impact of late payments and demand for extended terms. As a result, many Estonian companies were short of investments in many areas, unable to expand products and services, improve sustainability performance, and pay their suppliers faster.
For most Estonian enterprises, credit losses decreased (31%) or remained stable (35%) in 2021. Nevertheless, credit losses have become a major problem for Estonian and European companies. In 2021, 46% of firms in Europe admitted that credit losses have become problematic when it comes to customer payments. This year, such a concern is already for 60% of European companies. Baltic enterprises are hit particularly hard, with 73% of Estonians, 77% of Lithuanians and 80% of Latvians admitting credit losses as problematic.
According to Intrum survey, 86% of Estonian businesses consider debtors that pay after the set due date a significant problem – a slight increase from 2021, when 84% of businesses felt the same way. Long payment terms are considered less problematic than a year before: 76% of Estonian companies see this as a concern compared to 81% in 2021. However, the amount of Estonian businesses that see credit losses as a serious problem when it comes to customer payments grew by half: 73% in 2022 compared to 47% in 2021.
„As there is little certainty about how long the inflation crisis will last, other strategies – investing in new skills and technologies, reviewing all the invoicing and debt collection process with outsourcing debt collection if needed and enhancing ESG performance - will be required for the months ahead,“ said Ilva Valeika, managing director at Intrum Baltics.
Challenge of late payments across Europe
Across Europe, the growing challenge of late payments, in an unpredictable economic environment, is a cause for concern. But there are reasons to be optimistic about the broader picture for debt and money-flows. Three-quarters of European respondents (76 per cent) say improving their debt management is, for example, a strategic priority for the next 12 months. Russia’s invasion of Ukraine may have been a catalyst for this shift. Prior to the war, when our survey had been in the field for approximately five weeks, 52 per cent of businesses worried that the risk of late payments would grow over the following 12 months. After Russia’s invasion, this figure rose to 61 per cent. Similarly, while 71 per cent of respondents were focusing on debt management as a strategic priority before the conflict, the figure increased to 81 per cent after hostilities began in late February.
European Payment Report by Intrum is available here: www.intrum.ee/epr2022.
Intrum is the industry-leading provider of Credit Management Services with a presence in 24 markets in Europe. Intrum helps companies prosper by offering solutions designed to improve cash flows and long-term profitability and by caring for their customers. To ensure that individuals and companies get the support they need to become free from debt is one important part of the company’s mission. Intrum has more than 10,000 dedicated and empathetic professionals who serve around 80,000 companies across Europe. Intrum is headquartered in Stockholm, Sweden and the Intrum share is listed on the Nasdaq Stockholm exchange.