Germany: businesses underestimate payment default risk

Payment Practices Barometer

  • Germany
  • Automotive/Transport,
  • Chemicals/Pharma,
  • Electronics/ICT,
  • Machines/Engineering,
  • Metals

25th November 2020

A considerable number of German companies still underestimate the risk of payment default in domestic business

Introduction

The pandemic downturn that has spread rapidly throughout the world has reached  Germany at a relatively good point in its economic cycle. The country has enjoyed ten  years of solid economic performance, albeit with a slowing of economic expansion last  year. This summer, as lockdown orders took effect pausing production or sales for many companies in Germany, the business community acted fast. This has enabled them to  maintain their turnover on a certain level. In some cases even growing sales were possible through attractive credit terms.

It was at this point that we conducted this year’s Payments Practices Barometer survey. In addition to providing us with direct access to business opinion at a critical time, it provides us the opportunity to compare COVID-19 impacted business results with pre-pandemic   times.

Key takeaways from the report

  • Businesses surveyed in Germany reported that they most often accepted requests for trade credit from SME B2B customers in order to stay competitive on the domestic market during the pandemic
  • Payment terms see more than four-fold increase
  • Late payments rise in Germany by 65% year-on-year
  • Businesses in Germany are more optimistic about the outlook for the domestic economy than counterparts in region. This is the case also for their opinion about the outlook for the global economy and international trade
  • The majority of businesses surveyed in Germany told us that the greatest threats to business profitability in 2021 include: maintaining adequate cash flow, cost containment, collection of outstanding invoices and potential restrictions to bank finance

Interested in getting to know more?

For a complete overview of the corporate payment behaviour in Germany during the COVID-19 pandemic and global recession, please download the complete report.
The report gives also insight into the impact of the pandemic-induced economic crisis on the following industries in the country:

  • Chemicals
  • ICT/electronics
  • Machines
  • Steel-metals
  • Transport

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