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Late payments expected to increase

UK businesses are less likely than their European peers to make growth a priority according to the annual Intrum European Payment Report and late payments are expected to grow significantly in the coming months, following rising inflation and interest rates.

Late payments expected to increase
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UK businesses are feeling the pressure of global economic conditions, with fears of a surge in late payments and economists expressing concern that the economy could fall into a state of stagflation – where inflation is rising quickly with little to no growth. Across Europe, growth is also slowing while supply-chain disruption and soaring energy costs are driving inflation at rates not seen for decades.

About six in 10 companies said they are worried that the risk of late payments will grow this year, according to the report, which surveyed 11,000 companies across 29 European countries.

A third of respondents said that late payments are prohibiting the growth of the company, hampering the economic and social development of the economy.

Two out of three businesses said faster payments from their customers would help them improve their sustainability performance, and six out of 10 said it would help them grow by allowing them to expand their products and services.

Eddie Nott, MD for Intrum UK, said that more than half of businesses expect late payments to jump this year, but “a similar proportion say they do not have the in-house expertise needed to successfully manage the impact of inflation on their business”.

Meanwhile, respondents admit they are struggling to manage the impact of inflation on their businesses, with more than half of UK businesses saying it is inhibiting growth (51 per cent), stopping them from meeting wage demands (57 per cent), and preventing them from paying suppliers on time (60 per cent).

“UK businesses are battening down the hatches and are less likely to prioritise growth than their European peers,” said Mr Nott.

Also, almost six in 10 businesses said they are more cautious with their borrowing and spending plans, as they expect interest rates to rise more than once during the next 12 months.

“Concerns are rising as inflation is accelerating and growth is flattening. If this trend is not broken, we could be facing a period of stagflation – contracting economic output combined with high inflation,” said Anna Zabrodzka-Averianov, senior economist at Intrum. “On a positive note, labour markets across Europe have continued to strengthen this year, although low unemployment rates could lead to further upward pressure on wages.”

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