Payment risks: positive change based on economic growth
Payment risks decreased compared to previous years (2004 to 2006) primarily a consequence of a change in economic growth. However, as fundamental changes in combating late payment are still absent, payment risks will start to increase again in the near future. From the ten largest European economies, seven (Germany, Great Britain, France, Spain, the Netherlands, Belgium and Poland) show lower payment risks, one the same (Greece) and two show higher risks (Italy and Denmark).
Public authorities remain the worst payers
Payment duration decreased on a Pan-European level compared to the previous three years, remaining above the Spring 2004 value:
Spring 2004: 58.2 days
Spring 2005: 58.8 days
Spring 2006: 59.2 days
Spring 2007: 58.6 days.
All three customer groups contributed to the positive payment trend, however with strong regional and local differences. On a Pan-European level (average of all countries) payment duration in the consumer market reduced from 42.5 days in Spring 2006 to 42.0 days, in the business customer market from 59.9 days to 58.6 days and in the public sector from 69.8 days to 68.9 days.
Payment risk trend 2007: modest pessimism
The companies surveyed are modestly pessimistic regar-
ding payment risk development during 2007 (-3.8%)*. Companies in the Baltic (+18%) are most optimistic whilst the companies in the German speaking area (-10%) and those based in the Greek speaking area (-10%) show the most pessimistic forecast. Hungary, the only country in the Central Eastern European and Baltic region suffering from increasing payment risks, shows the most pessimistic value (-31%) from all 25 countries surveyed, whilst Latvia (+30.7%) followed by Hungary’s neighbours’ Slovakia (+18.4%) and Czech Republic (+18.2%) show the most optimistic forecasts.
* The Risk Forecast Index shows the balance in % of the companies forecasting a decrease in payment risks and the % of the companies forecasting an increase. A positive %age represents a balance of companies forecasting a decrease and vice versa.
For further information, please contact:
Intrum Justitia, GISL, Stockholm
Madeleine Bosch, Head of Research EPI
Tel: +31 70 452 7323
Mobile: +31 6 46 21 25 79
E-mail: public-relations.epi@intrum.com
Intrum Justitia is Europe’s leading Credit Management Services (CMS) group, with revenues of approximately SEK 2.8 billion (USD 375 million) and around 2,900 employees in 24 European markets. Intrum Justitia strives to measurably improve customers’ cash flows and long-term profitability by offering high quality in relationships with both customers and debtors in each local market. The group offers a wide range of services to manage commercial and consumer receivables. Intrum Justitia AB (ticker IJ) is listed on the OMX Nordic Exchange in Stockholm. Fore more information, please visit http://www.intrum.com/
Overview about payment risks measured by Payment Index
(values shown: Spring 2007 - Spring 2006 - Spring 2004)
1 Finland 124 125 123
2 Sweden 126 129 127
3 Norway 130 131 137
4 Denmark 132 131 126
5 Iceland 134 136 130
6 Ireland 141 --- 143
7 Switzerland 142 146 148
8 Scotland 142 --- ---
9 France 145 147 146
10 Latvia 148 155 157
11 The Netherlands 149 154 153
12 UK 150 152 154
13 Germany 151 155 156
14 Estonia 151 153 157
15 Belgium 154 161 162
16 Italy 157 153 152
17 Spain 158 161 166
18 Lithuania 158 159 167
19 Poland 159 162 161
20 Slovakia 160 --- ---
21 Hungary 160 158 156
22 Cyprus 172 --- ---
23 Czech Republic 173 --- 176
24 Greece 174 --- ---
25 Portugal 182 183 191
Payment Index
The payment index is used to compare different economies, regions or sectors. Alongside technical financial figures, the index is based on assessments from the companies surveyed. The data forming the basis of the index is generated twice yearly using a standardised written panel survey. List of basic data elements: Contractual payment term (in days); Effective payment duration (in days); Age structure of receivables (DSO); Payment loss (in %); Estimate of risk trends; Characteristics of the consequences of late payment; Causes of late payment. The Payment Index is calculated from eight differently weighted sub-indices, which are based on a total of 21 individual values.
Payment Index - Implications for Credit Policy
100 no payment risks, i.e. payments are made in cash, on time (or in advance) and without any credit
101 - 124 preventive actions - measures to secure the current situation are recommended
125 - 149 need to take action
150 - 174 strong need to take action
175 - 199 major need to take action
over 200 urgent need to take action
Optimize your operational profit
Intrum Justitia gives you the opportunity to compare key operational figures for your company with average market values and Best Practice values. The tailor-made report calculates the individual risks for the company and presents comparisons of payment history of customers, the age structure of outstanding receivables as well as payment losses. Furthermore, potential improvement opportunities (capital commitment, profit optimisation) are identified and calculated. This unique expert tool includes values from 26 European markets. The European Payment Benchmark report is available free of charge. To get access
