Only 1 in 3 SMEs reserve additional funds for their growth plans

According to Intrum’s European Payments Report, among the factors hindering companies from investing in strategic growth initiatives are: Customer late payments (39%) and bad debt losses (18%).

Likewise, one in two Spanish organizations considers that the ever-widening gap between payment conditions and their realization is a real risk for their development. These difficulties would be altering the road map set by the companies, in which the growth of their business is the main priority of 6 out of 10 companies.

According to the National Institute of Statistics, 26,207 Spanish companies announced their closure in 2022, 10% more than the previous year and the highest figure since these data were recorded. Information that shows that 2022 was not an easy period for the national business ecosystem, limiting the investment of companies in their growth strategies. A trend that is also shared by the Intrum European Payment Report, from which it can be deduced that, in the last year, only 35% of Spanish companies have been able to book additional funds to achieve their growth plans. This figure places the entities in our country four points below the European average (39%).

Specifically, among the 29 European countries analyzed by the credit and asset management services firm, Spanish companies would occupy the seventh position from the bottom, below Germany (44%), France (42%) and the United Kingdom (38%), and they would be at the same level as Portugal (35%). The entities that are reserving the most additional funds would be the Irish (48%), the Swedish (48%) and the Hungarians (47%), while at the other extreme would be Bosnia and Herzegovina (29%), Lithuania (29%) and Croatia (26%), as the European countries whose organizations have least secured such funds.

What factors are limiting business growth?

Delays in payments and debts that are never collected would, in this case, be one of the main causes of not being able to invest enough in the growth of the business. The report developed by Intrum highlights that 39% of Spanish companies acknowledge that their investment in strategic growth initiatives has been affected by late payments from customers, and 18% refer to bad debt losses as another of the reasons for not moving forward in this direction.

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In fact, as they admit, the ever-widening gap between payment conditions and their completion would be a real risk for the growth of 49% of Spanish companies, a percentage similar to the European average (50%).

These figures show that the effective management of collections and payments is a fundamental requirement for the growth of the business network. If an entity does not receive payments from its clients on time, it will not have sufficient resources to generate more employment, invest in innovation or develop in efficiency and competitiveness, and, in the medium term, it will not be able to meet its financial obligations either, causing its suppliers and creditors to also end up in the same situation.

On the other hand, the current sociopolitical context is also affecting business development. In this sense, the latest edition of the ‘Survey of Spanish companies on the evolution of their activity’ of the Bank of Spain -corresponding to the fourth quarter of 2022-, would reveal some of the causes that could be limiting the growth of companies: 81% of organizations are negatively affected by the high cost of energy inputs, while 45% is affected by supply difficulties associated with the conflict in Ukraine. According to the same study, other factors that are hampering business development are labor shortages (45%) and difficulties in receiving supplies from regular suppliers (31%).

All these difficulties would be altering the road map set by the companies, in which business development plays a fundamental role. In fact, as Intrum points out in its European Payments Report, the growth of your business is the main priority of 61% of the companies in our country. A fact that places Spain as the third country
European whose organizations have business growth as a priority, only below the entities of the Netherlands (71%) and Switzerland (71%).

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