The European-wide white paper confirms the negative financial impact of the Covid-19 crisis on business outlook, payments, and financial behaviour. The survey was conducted among financial executives and business leaders in 9,980 companies across 29 European countries.
The risk of pan-European recession is the main challenge facing customers paying on time over the next twelve months, according to UK respondents. More than two-thirds (67 per cent) rank this among the top three challenges, compared with 57 per cent across Europe. This increases from 50 per cent of those surveyed before the Covid-19 crisis to 75 per cent during the Covid-19 crisis.
With Europe heading for recession, 42 per cent of British businesses expect it to have a severe impact on them, and 31 per cent plan to cut recruitment as a result.
Late payment is also a greater threat to survival in today’s environment, with 51 per cent saying it reduces their liquidity, compared with 23 per cent pre-Covid. Over half (52 per cent) of UK businesses say that macroeconomic uncertainty has caused them to extend their payment terms to suppliers over the coming year – up from the European average of 41 per cent, and the highest in Europe.
Intrum UK Managing Director Eddie Nott said “The pandemic has piled pressure onto businesses in an unprecedented way and many firms do not have the flexibility to survive late payment.”
“With pressure on cash flow, timely payment is more important than ever as businesses struggle to navigate the loosening of lockdown restrictions. The long-term economic effects of the Covid-19 crisis are not yet clear, but in the short term many UK businesses face a battle for survival.”
Against this backdrop of exceptional change and disruption, businesses are looking for extended help to navigate through the challenges – 56 per cent said they feel new legislation is needed. There is also a rise in the adoption of the EU Late Payment Directive, despite the UK’s exit from the EU: 27 per cent of UK businesses in the survey say they always use it, compared with 5 per cent in 2019.
Nott continued “Awareness of the impact of late payment and the options open to businesses under EU and UK legislation is important. These and further voluntary initiatives will be essential in ensuring steady cash flow for UK businesses as we emerge from the immediate crisis.”