Europe’s Biggest Debt Collector Sees Rise in Late Payments
(Bloomberg) -- Intrum AB, the biggest debt collection company in Europe, says its latest survey of businesses in the region shows many are bracing for growing payment issues.
“Companies themselves expect increases in late payments,” Anders Engdahl, Intrum’s chief executive, said by phone. “Overall, the aggregate loan-to-value ratio in relation to GDP in the European economy has increased quite sharply in 2021.”
After more than a year of pandemic-induced restrictions, it’s still unclear how quickly Europe’s economy will bounce back from the Covid crisis. That’s despite the onset of summer, which last year offered some relief from the virus. Now, the region is facing more aggressive coronavirus strains that are forcing some governments to rethink and even delay plans to reopen.
Intrum said that roughly half the 11,187 companies it surveyed across 29 countries through mid-April said they felt “lucky” to have survived the pandemic. And thanks to government packages, the number of bankruptcies actually fell. But as support measures are unwound before companies get back on their feet, there’s a risk that many businesses will struggle, Engdahl said.
Companies in eastern Europe were among those to “emerge as the most challenged in how they view growth conditions in the recovery phase,” Engdahl said. They also “expect the most increases in late payments after the crisis.” That said, Spain, Italy and Greece fared relatively well, thanks to early government support, he said.
Survey highlights include...
- About two-thirds of companies see a growing risk of late payments in 2021.
- 45% of business leaders today are more positive about growth prospects than they have been for many years.
- Roughly half the companies surveyed that suffered a decline in profits don’t expect business to return to normal until 2022 or 2023.
- Eight out of 10 companies expect the pandemic to have a negative impact on their business.
- Six in 10 would welcome new legislation to deal with late payments.
- So far this year, 20% fewer companies than in 2020 have accepted longer payment terms than they’re comfortable with.
- Intrum’s survey, the European Payment Report 2021, was conducted between Jan. 25 and April 16.
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