Lisbon, Sept. 4, 2024 (Lusa) - 42% of Portuguese companies reported a reduction in their non-performing debts this year, below the European average of 44%, according to data from the European Payment Report (EPR) 2024 Portugal, produced by credit management company Intrum.
Even so, the study highlights that, in 2020, only 22% of the companies that responded to the EPR reported that the value of their non-performing debts had decreased, and this percentage has now risen to 42% in 2024.
"The majority of Portuguese companies that took part in the study do not seem to have had a very negative experience with bad debts," says Intrum, noting that "only 15% recognise that bad debt losses have been an obstacle to investing in their strategic growth initiatives, compared to 12% in Europe."
On average, Portuguese companies recognised the equivalent of 1.21% of their total revenue as bad debts in the most recent financial year, which compares with a European average of 0.9%.
In order to prevent delays and/or non-payment, the EPR reveals that this year 45% of companies admit that they may go ahead with pre-payment, while 30% point to credit insurance as a good option.
Credit control and bank guarantees could be a solution for 28% of companies, while 26% emphasise that they could invest in fraud prevention measures.
The EPR 2024 Portugal also shows that, in order to maintain customer loyalty, almost half of the companies surveyed (49%) intend to start or expand the offer of ‘buy now, pay later’ solutions, allowing customers to pay for purchases in instalments over time.
When asked what measures they take in the event of late or non-payment by customers, more than half (54%) say they go to the civil courts, while 26% admit to using internal collection processes and 21% turn to external collection agencies.
Factoring (selling debts to collection agencies or third parties) is an option for 15% of the companies that responded to the study.
Quoted in a statement, the director-general of Intrum Portugal considers it "encouraging to see that Portuguese companies are less and less concerned about bad debts affecting their cash flow and liquidity", especially in a context where "European companies are currently expecting at least €10.5 trillion in defaulted accounts".
However, Luís Salvaterra warns that, "with the increase in insolvencies and the continuing cost of living crisis for millions of consumers, companies cannot be complacent about late payments and defaults."
EPR 2024 collects information on the payment behaviours of European companies and examines trends related to late payment, invoice payment practices and overall financial risk.
The report is based on external research carried out by FT Longitude in 25 European countries, with a total of 9,255 small, medium and large companies from 15 industry sectors taking part. In Portugal, 240 executives took part.
The companies were randomly selected from a database and the fieldwork for the study was carried out between 5 December 2023 and 12 March 2024.
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