The Covid-19 pandemic crisis is affecting the European payments landscape with businesses facing unparalleled uncertainty according to late insight research by European credit management specialist Intrum.

The report indicates sharp drops in GDP across Europe are now pushing down revenues for businesses, restricting cash flow while increasing pressure on businesses to manage their cash and liquidity more efficiently.

Mikael Ericson, President and CEO of Intrum said “Safeguarding a steady cash flow through timely payment is more important than ever. Many businesses are now operating in survival mode, as they have been forced to rapidly close down due to government lockdowns following the Covid-19 pandemic.

The reports says that the long-term economic effects of Covid-19 on European businesses are uncertain. But in the short-term, the crisis is already affecting consumers, leading to increased negative financial pressure and wellbeing. Lower disposable incomes are impacting consumers’ ability to pay invoices on time.

Ericsson continued “Government restrictions on travel, shopping, dining out, exercise, and other leisure activities have hit Europe’s hospitality and leisure industry hard, Lockdowns are now being lifted across Europe, but it is likely that the pandemic will have a lasting impact on businesses within these industries.”

About 4 in 10 survey respondents from this sector (42 per cent) say that a recession will have a severe impact on their businesses – the highest figure of the 11 industries Intrum surveyed.

The recession is the top challenge for companies during Covid-19, with 44% citing it as having a severe impact on their business, up from 26% pre-crisis with more than half (56%) say their country is already in recession or will be within a year (2019: 28%)

4 in 10 (38%) meanwhile say that a recession will have a severe impact on their businesses

Against this backdrop of exceptional change and disruption, businesses are looking for extended help to navigate through the challenges. There is also a rise in the adoption of the EU Late Payment Directive, which 23 per cent of European businesses in the survey say they always use, compared to 8 per cent in 2019.

The survey was conducted among financial executives and business leaders in 9,980 companies across 29 European countries.

The full report can be viewed here.