Comparison of Payment Behavior: Will Payment Behavior in Switzerland Soon Drop Even Lower?
What else is making it difficult for local companies to survive? The Country Report Switzerland, which was published on June 11 together with the European Payment Report 2019, provides clear answers to these questions and much more. Intrum, the publisher of the study, surveyed over 11,856 companies in 29 European countries for this year's edition.
Europe's politics are on the move. Switzerland, in the middle of it all but only partly directly involved, is not unaffected. The economic ties between its companies and the euro zone are closely interwoven, its trading partners are important, and its dependencies are great. After last year's confidence, skepticism is growing among Swiss companies regarding the future strength of Europe. Pessimism is spreading due to the already weakening economy in Europe and the below-average economic forecasts for Switzerland. This is shown by the country analysis from the current European Payment Report, which was conducted by Intrum AG.
Economic downturn feared
Just under a third of respondents fear an economic downturn within the next two years or are convinced that Switzerland is already in a recession. At 27 percent - compared with just 7 percent last year - a strikingly higher number of Swiss companies expect their debtor risk to increase even further 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 of 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 proactively reducing 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 bills 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%).
Future: Without cash but with a lot of risk from the network
Many sectors 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 10 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
