The perils of late payments.
Many European firms can't invest in digitisation because of late payments, the Survey 'European Payment Practices' shows.
Decision-makers see hurdles with digitisation.
With artificial intelligence, big data and machine learning, the digital transformation is opening up new opportunities in receivables management. Yet many industrial, retail and service companies are facing new challenges brought by digitisation. Both findings come from the EOS Survey ‘European Payment Practices’ 2018.
In the study of 3,400 decision-makers from 17 countries, 45 per cent of the respondents said keeping up with the technological transformation in receivables management is a challenge (see chart below). The respondents also said reducing costs (49 per cent) and qualifying their employees (48 per cent) were even more important tasks. Following in fourth place (43 per cent) is the digitisation and automation of debt collection processes. Thirty three per cent of the respondents also foresee substantial investment in IT solutions. On the other hand, only 13 per cent of the study participants said the use of artificial intelligence is relevant.
‘The survey results indicate that many companies have to adopt new technologies and enhance their know-how’, says Klaus Engberding, Chairman of the EOS Group’s Board of Directors. EOS has already initiated the greatest investments in its IT systems since the company’s founding. ‘This is how we consistently support our clients with solutions at the highest technological level. By providing them with the best results in debt collection and in the sale of receivables, we boost their cash flow. Professional receivables management helps companies to build a strong financial foundation on which to implement their digital agenda’.
Change requires investments.
Managers of receivables view technological innovations as challenges in their business. For instance, 45 per cent of the respondents said it is important to keep up with the technological transformation.
More punctual payers – but not enough.
The economic recovery is having a positive impact on European payment behaviour. A look-back over the past five years shows that from 2014 to 2018, the number of punctually paid bills rose by four percentage points to reach 79 per cent. During the same period, late payments fell by three percentage points to 18 per cent. In 2018, enterprises need only write off three per cent of their invoices as irrecoverable, in 2014 the figure was four per cent.
Nevertheless, companies continue to suffer from the bad payment behaviour of consumers. 42 per cent of respondents are registering losses in profits on account of late payments and unpaid invoices (see diagram above). 38 per cent of them have problems with liquidity. 14 per cent even fear their companies could go bankrupt.
The survey results indicate that many companies have to adopt new technologies and enhance their know-how.
A further 23 per cent of respondents say they do not have the required liquidity for investments because customers do not pay their bills. ‘Companies can boost their cash flow by collaborating with professional debt collection services. They can then invest this money and thus secure their corporate success’, says Klaus Engberding, CEO of the EOS Group.
Unpaid invoices slow down the economy and companies.
Late payments and unpaid invoices inhibit companies’ growth. 23 per cent of the respondents forgo investments. 14 per cent of them even fear for the existence of their companies.