Sharp increase in pressure on companies' working capital

Businesses need to be more patient with their funds given the postponement of bill payments around the world. Last year, the DSO, payment time average increased to 59 days (+5 days). Western European companies must wait longer: 68 days (+7 days). Moreover, 17% of global companies even have to wait 90 days.

Johan Geeroms, our Risk Underwriting Director Benelux: “Deferred payments directly affect the day-to-day business of companies and can even lead, in the worst case, to bankruptcy. Seeking additional working capital from banks is not easy. Companies are therefore being more cautious and slowing down, the economy is running out of steam and credit risk increases. »

Companies risk using their suppliers as a bank and thus taking control of them. Deferring invoice payments really has a snowball effect: one pays the other late or not at all in case of non-payment. An important unpaid invoice quickly becomes a nightmare for many SMEs. Johan Geeroms therefore advises companies to monitor their overdue invoices closely and fine-tune payment terms.

In companies, the constitution of stock represents an important cause of postponement of payment. Johan Geeroms: “The coronavirus health crisis has caused a massive disruption of the supply chain and the disappearance of “just in time” deliveries. Companies were indeed suddenly deprived of their raw materials. They then opted for other solutions, in particular the supply of goods from local suppliers or the constitution of additional stocks.

Currently, 34% of companies have stocks to ensure more than 90 days of turnover. The sectors most affected are those of means of transport (46%), textiles (39%), electronics (38%) and mechanical engineering (36%).

According to Johan Geeroms, stocks will decrease over the coming period. “Economic growth is slowing, but businesses need money, because even banks are no longer lending easily. They will therefore offer their stocks at lower prices to liquidate and capitalize them. Or they will decide to temporarily reduce their production. »