PRLog - June 3, 2014 - LONDON -- A recent Europe-wide business survey has revealed no improvement in the pressure on European businesses from customers’ late payments, with 55 per cent of businesses across Europe reporting late payments resulting in loss of income, 63 per cent claiming additional pressures on liquidity, and 50 per cent citing late payments as having a direct impact on company growth.
russell bedford logo
In the Republic of Ireland, 47 per cent of businesses surveyed claimed late payments had impacted their business to such an extent that they had been forced to dismiss staff. 60 per cent claimed the problem had forced them to put recruitment plans on hold. Tony Carey, managing partner of Russell Bedford Dublin member firm Cooney Carey, points out that "The Irish banking system is only now making headway in resolving its own liquidity positions in order that it can lend. However, the withdrawal of a number of international banks has meant that a significant amount of available funds are being used to refinance existing banking arrangements."
The public sector is a particular problem, delaying payments (across Europe) by an average 58 days – a situation particularly acute in those countries most severely impacted by austerity measures, standing at 85 days in Italy and 105 in Greece.
Luca Borella, a partner at Russell Bedford Bologna member firm Magagnoli & Associati, feels this is the result of public sector contracts under which many companies are reluctant to pursue payment. "In fact, businesses are usually convinced that pursuing the public sector is highly ineffective and expensive and are, instead, often prepared to wait – suffering financially, losing income and, in turn, causing a ‘domino effect’, resulting in late payments to other companies not directly involved with the public organisations. Companies involved in public sector know very well that one of the main reasons for late payments recently is the effect of the Stability and Growth Pact, which created the conditions for the general financial slowdown. Hopefully, this scenario is slowly changing, partly thanks to recent legislation focusing on new rules for public sector payments."
This is a view endorsed by Ricardo García-Nieto Conde, partner at Russell Bedford Barcelona member firm ASEPYME / GNL Auditores. "It is hard to overestimate the impact current austerity policies have had on those businesses reliant on the public sector. There comes a point at which businesses have to evaluate the impact of public-sector clients on their on-going cash-flow situation, and their longer-term viability. There are signs of improvement, however. At PIMEC (Catalonia’s leading SME organisation)
Notes to Editors
About Russell Bedford International
Established in 1983, Russell Bedford International is a global network of independent firms of accountants, auditors, tax advisers and business consultants. Ranked amongst the world’s leading accounting and audit networks, Russell Bedford is represented by some 460 partners, 5000 staff and 280 offices in more than 90 countries in Europe, the Americas, the Middle East, Africa and Asia-Pacific. Russell Bedford International is a member of the IFAC Forum of Firms and a member of EGIAN, the European Group of International Accounting Networks and Associations.
Russell Bedford International
T: +44 20 7410 0339