Recovery comes slowly to Southern Europe
Businesses in Southern Europe are apprehensive about their customers’ ability or willingness to pay their invoices and debts on time, according to the latest European Payment Report.
An overview of the European Payment Report (EPR) local results for Southern Europe, including: Greece, Italy, Portugal and Spain.
Two in three respondents in the region expect the risk of late/non-payments to grow in the coming year, higher than the European average of 60%.
Of all respondents, businesses in Southern Europe are also most likely to say that they are finding it increasingly difficult to pay their suppliers on time, meet rising employee demand for higher wages, and maintain their focus on growth.
Difficulty paying suppliers on time
In Portugal and Spain, 61% of respondents said inflation is making it increasingly difficult to pay their suppliers in a timely fashion and 59% in Greece said the same. Only Italian respondents (54%) were less likely to report difficulties than the European average of 56%.
However, only 45 per cent of Portuguese businesses say that their business is taking steps to ensure they are better at paying suppliers on time. Greece (54%), Italy (49%) and Spain (51%) were also below the average of 56%, suggesting there is more that can be done to improve the situation.
While half of those in Italy and Spain said they are involved in a voluntary initiative to help solve the problem of late payment, this is lower than the average of 51% and in Greece and Portugal there was even less involvement, with only 39% and 45% respectively taking part in such an initiative.
Wage rise demands bite
Portuguese respondents were particularly concerned about their ability to meet rising employee demand for higher wages: 58% compared with the European average of 53%. Portugal’s economy had a strong year in 2022, seeing its highest growth rate in over three decades. However high inflation is threatening to dampen the outlook.
In Spain and Italy 55% said they were worried about their ability to pay increased wages. Labour costs may also be a concern in Greece, where 48% of respondents said that a small number of their employees has already been asking for pay rises, compared to 38% on average and second only to the United Kingdom out of all countries surveyed.
After suffering disproportionately during the Covid years, due to their reliance on hospitality and tourism, Southern European businesses are now wary to invest in upgrading their back-office systems. They are more likely to say that their routines and processes are not as strong as they should be to ensure financial sustainability than average, while most in the region say their finance and administration systems are outdated and prevent them from being agile.
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