Press release Stockholm, 2011-11-21 08:00 CET

European Professional Services hit hard by bad debt

A survey of almost 6,000 businesses across Europe shows significant differences in how industry sectors are hit by bad debt and late payments. Businesses in Professional Services on average have to write off 4.5 percent of all transactions whilst businesses in Utilities only write off 1.5 percent. Credit Management Services Group Intrum Justitia believes the situation will worsen in 2012, but that there are protective measures to be made by businesses, measures essential to boosting Europe. This is reported in the EPI 2011 Industry White Paper.

European Businesses write off a record total € 312 billion or 2.7 percent of all transactions. However, this burden is not spread evenly across the different industry sectors – the industry hardest hit, Professional Services (For example Accountants, Law Firms and Recruitment Industry) write off three times the percentage of sales of Utilities (Gas, Water and Energy). Construction & Building, Real Estate and Education have to write off well above average, whilst Transportation and Business Services are doing better than the average.

“Our survey indicates that things will start turning worse before they turn for the better. Professional Services are often first hit by client budget cuts, which means they serve as a warning of what may lie ahead. Unfortunately, history tells us that other Industries are to show significantly higher bad debt next year,” says Intrum Justitia CEO, Lars Wollung.

Professional Services also see the largest increase in write offs from the previous year, up 12.5 percent. Transportation write offs are also increasing fast, 9.5 percent up from previous year, although from a rather modest level. Real Estate see write offs decreasing significantly, with over 5 percent.

”Although the picture painted in our report may seem grim there are measures companies can take to protect themselves. There is a lot that can be done to help the businesses in boosting Europe. We see that businesses that know their customers and implement efficient credit policies get paid earlier and have to write off a smaller percentage off sales, comments Lars Wollung.”

Key findings from the EPI 2011 Industry White Paper

Read entire press relese here

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