Intrum: Inflation and late payments, the two thorns for Greek companies

By Leonidas Stergiou

The effects of stagnant inflation, ie almost zero growth with high inflation, are the big headache for European companies, according to the European Payment Report 2022, which was completed in April and called for estimates for the next period until the end of the year.

For companies in southern Europe, the problem of finding talent, natural disasters and volatile consumer confidence is added. In Greek companies, the biggest concern is related to rising inflation and the fact that they are not prepared, with the right structures and staff, to deal with this new environment that is taking shape. This includes problems in supply chains, but also a lack of knowledge of international markets. Inflation, its effects and shortages are the biggest headaches for 60% of Greek companies. The percentage in the EU is similar. (on average), with the difference that in the EU the percentage of companies that are concerned about the increase in borrowing costs is higher (Greece 48%, EU: 57%).

Unknown waters

According to the Intrum report, Greek companies believe that the pandemic is over and that they should now focus on managing inflation. Investments through the Recovery Fund are working well in reducing borrowing costs and increasing investment, as are government support measures against the energy crisis. On the other hand, 7 out of 10 Greek companies admit that they do not have the knowledge, experience and internal structures to manage the effects of inflation on them. The corresponding figure for European companies is lower, at 58%.

The positives include the assessment of 44% of companies that the pandemic is not going to have any negative impact in the next six months, compared to 26% in the EU. On the other hand, 46% believe that inflation will prevent businesses from growing and taking advantage of new opportunities.

Late payments

However, 65% of Greek companies are worried that their customers will show insolvency on time in 2022, when the corresponding percentage in 2021 was 61%. Already, private customers are delayed by 9 days in payments, transactions between companies and by the State by 13 days (more than the agreed period).

Europe

In the EU, research findings are coded as follows:

-6 out of 10 companies are concerned about the risk of late payments due to inflation, a stricter institutional framework and rising interest rates.

-55% of companies are worried about being able to meet the salary increases and payments (on time) of their suppliers.

-60% are worried about the borrowing and the budget they have formed, as they expect an increase in interest rates in the next 12 months.
8 out of 10 companies consider that the strengthening of cash liquidity is the main goal from now on in order to address the price increases and the cost of production and raw materials, but also to reduce the credit risk. Focus on debt management and credit risk.

-53% will invest in procedures for managing late payments
40% believe that late payments will hinder business growth.