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Hungarian companies are hampered in their growth by non-paying customers and credit debts, according to Intrum’s representative European Payment Report 2022 (EPR), which was released to MTI on Wednesday.
In the survey, 43% of Hungarian respondents reported that they are unable to hire new workers due to non-payments, and 41% are unable to make other types of new investments. In many cases, late payments also threaten the current operation of the company: 35 percent of managers said that late payments could lead to redundancies in their company, while 32 percent said that the very existence of the company could be at risk. Hungarian firms have managed to reduce losses due to outstanding payments to a lesser extent than the European average and than in other Visegrád countries.
Now in its 24th edition, the survey questioned more than 11,000 businesses in 15 countries. According to the survey, the proportion of firms in Hungary that increased their losses from non-performing loans, and those that reduced their loss of revenue from bad debts was the same last year (31 percent). This is a worse result compared to the European average, as the continent as a whole was characterized by a decline in credit losses in 2021. Hungarian firms also fared worse compared to the other Visegrád countries, with a much larger decline in losses in the Czech Republic and Slovakia, and a similar decline in Poland, but slightly smaller than in Hungary.
Judit Üveges, Intrum’s sales director, said in the statement that Hungarian company managers said that liquidity problems were mainly caused by customers paying late. Despite the fact that Hungarian companies set relatively long payment deadlines compared to other countries, more than half of the respondents allow more than 20 days for retail customers to pay, and even longer deadlines are common for corporate counterparties.
According to most respondents, longer deadlines were mainly necessary to keep their customers, and in view of the worsening global economic trends, extending deadlines is safer. According to Üveges, customized payment solutions are less common in Hungarian business. In Hungary, the best-known default prevention measure is loan pre-financing, with 48% of respondents using some form of this solution.
Around a third of Hungarian managers only check their client’s creditworthiness, a similar proportion across Europe, with 23% using a credit guarantee contract and 15% opting for a bank loan guarantee. However, more than half of respondents are not satisfied with the solutions currently in place, with 54% saying that new legislation is needed to tackle late payments.
The European Claims Management Group produces its annual European Payment Report, for which it collected data from 11,007 companies in 29 European countries on their financial performance between January 14 and April 12 this year.
Featured image via Intrum’s website
