One of the great headaches of the business sector is that of defaults. Many businesses adopt preventive positions that force them to implement different measures to protect themselves from delinquency: advance payments, credit checks, credit insurance, bank guarantee… However, just as important as correct collection management is assuming a role proactive and responsible regarding financial obligations with suppliers, maintaining a balance between both aspects.
To achieve this, in recent years the implementation in companies of a code of ethics that promotes the culture of prompt payment, thus helping to achieve greater economic sustainability. Although the pandemic increased the number of companies that had a similar document, this commitment has now been significantly reduced. As shown by the last European Payments Report of Intrum, 31% of Spanish entities have a code of ethics of this typecompared to 48% who opted for this measure a year ago, which represents a decrease of 17 percentage points.
This lack of foresight contrasts with the economic reality that is making its way. According to one of the latest analytical articles by the Bank of Spain, entitled ‘The economic and financial evolution of Spanish companies in 2020 and 2021 according to the Central Balance Sheet Office’, both the average payment period to suppliers and the collection period to customers have increased , albeit slightly, throughout the first three quarters of 2021 compared to before the pandemic.
A situation that, although not excessively alarming, should be kept in mind due to the current economic uncertainty and the financial challenges that companies are facing. In fact, in the latest Bank of Spain Survey on Economic Activity (EBAE), corresponding to the fourth quarter of 2021, Spanish entities do not anticipate further improvement for the first quarter of 2022. To this is added, as the Spanish Confederation of Small and Medium-sized Enterprises (CEPYME) pointed out at the beginning of the year, the increase in costs expected for the business sector due to the evolution of energy prices and of the raw materials.
Spanish companies, in the queue in the implementation of measures
The European Payments Report reflects that the 51% of organizations admit to taking measures to ensure timely payment to its suppliersa percentage that leaves Spain in a disadvantageous position compared to the other 28 European countries analyzed by Intrum, although the differences are not very pronounced.
According to the study, spanish companies together with Portugal and Belgium (both with 51%), occupy the penultimate place in the ranking of companies that are applying guidelines of this type, only above Croatia (50%) and three points below the European average.
This lack of internal regulation of payments to suppliers is also reflected in the behavior shown by Spanish companies in the last year. As shown in the analysis carried out by the leading company in bad debt management, 59% recognize that macroeconomic uncertainty has led them to extend payment conditions to suppliers, which shows, once again, the need to take actions that help avoid future financial problems.
Greater awareness of the risk of defaults
However, despite the fact that the implementation of measures or the creation of a document that encourages the proactive management of payments and collections is not what it should be, more and more companies see this problem as a social issue that requires the reliable involvement of all the business framework. Especially from larger organizations.
Proof of this is that six out of 10 companies surveyed believe that payment dates should be part of companies’ sustainability reports, and 70% believe that larger companies have a responsibility to ensure that they are carried out on time. time payments to smaller entities.
