Poor payment practice

At 27 percent - compared with just 7 percent in the previous year - a noticeably higher number of Swiss companies anticipate an even higher risk of bad debt losses in the near future. They already write off just under 4 percent of their sales annually due to bad debt losses, which is significantly higher than the average for their European competitors. Only 6 percent of the companies surveyed still believe that their bad debt losses will be reduced in the near future. "Already many companies are acting with foresight and taking precautionary measures to prepare for any economic downturn," notes Thomas Hutter, Managing Director of Intrum AG. "Such measures, such as proactive reduction of accounts receivable risk, can be initiated at any time and have an immediate impact on the operating result. It also increases the company's financial flexibility and stress resistance in a challenging economic environment."

Late payers: complicit in liquidity shortages and insolvency

Business is problematic for 71 percent of Swiss companies if debtors do not pay their invoices until after the due date. Here, too, Switzerland is well above the European average of 51 percent. However, the payment periods, which have been reduced in some cases in recent years, have only had a moderate effect as an antidote. Creditors' patience is still being stretched beyond endurance. Payments from private customers are generally received around 4 days late, while corporate customers even allow themselves a 7-day delay. Public sector invoices are paid particularly far in excess of the payment deadline: instead of 31 days, the average wait for receipt is 42 days.

In comparison with European practice, Swiss companies set longer payment periods for private individuals, which in turn has an impact on the time it takes to actually receive payment. In contrast, the payment periods granted to corporate customers and by the public sector are shorter: These invoices have to be paid more quickly than in Europe.

Regardless of longer or shorter payment periods, payment morale is anything but good. The reasons for this can be found in financial difficulties on the part of debtors, but also in deliberate delay or carelessness. A good quarter of those surveyed complain of liquidity bottlenecks and lost sales as a result. Twenty-one percent see their growth hindered by delayed incoming payments, and 14 percent even see their existence threatened. Swiss companies are increasingly resorting to precautionary measures to avoid payment defaults: Advance payment ranks right at the top (55%), followed by credit checks (42%) and collecting their receivables (28%).

Without cash but with a lot of risk from the net

Many areas and industries have already digitized processes, not just in the future. Digital payment methods have long since become established. 48 percent of the companies surveyed believe that we will be living in a cashless society in ten years at the latest. This assessment puts Switzerland exactly in line with the European average. Although many also see the benefits for their company in digitization - including increased efficiency in payment processes and accounting - they worry about the increase in cyberattacks. Nearly two-thirds (63%) believe that as cashless payments continue to increase, so will the risk of cyberattacks. In the area of online commerce, which is taking on an increasingly important dimension, the risks to suppliers can be reduced or their security significantly increased by means of digital identity verification of customers.

Source: Intrum AG

The European Payment Report

The study, published by Intrum, is based on a survey of 11,856 companies in 29 European countries conducted from January 31, 2019 to April 5, 2019. It sheds light on payment behavior from various perspectives, highlights national trends and compares them with European comparative figures. The European Payment Report 2019 and the Country Report Switzerland 2019 are available as a Download available free of charge.