6 out of 10 companies in Poland complain about lower revenues, 8 out of 10 about non-paying customers. Intrum summarizes the impact of the pandemic on business in Poland and presents the results of the “European Payment Report 2021”

It’s not great, but it could be worse. This is how in one sentence you can summarize the results from the newest Intrum report – “European Payment Report 2021”. Although the corona-crisis reduced the income of 57% companies in our country, and 46% admit that it was lucky to survive the pandemic year 2020, but it is clear “battered” businesses are ready to make up for the losses and have an appetite for further development. The optimism ends when you think about customers not paying on time. They are already a problem for 77% of Polish entrepreneurs. What’s more, 6 out of 10 companies frankly admit that they are worried about their customers’ ability to pay on time. But paradoxically, the pandemic also has its positive effects. Business owners in our country have increased their awareness of the consequences of late payments. The vision of an impending recession has motivated them to address the problem of late payments a little more actively.

What is this crisis all about?

46% of entrepreneur-respondents to our survey admitted that, given the impact of the Corona-crisis on revenue and cash flow, their company was lucky to survive in 2020. What’s more, 6 in 10 (57%) of those interviewed indicate that the pandemic has reduced their companies’ profits. This shows the real impact of the corona-crisis on the financial situation of businesses in our country. Business services topped the infamous list of sectors that suffered the most (60%).

Nearly 4 in 10 (38%) respondents to our survey admit that it must take 6 months to a year before a pandemic no longer affects their companies’ financial situation. Some – 33% – are even less optimistic and believe that it will happen in 2022 or 2023. Entrepreneurs are also on the lookout for an economic slowdown. Nearly 6 in 10 (58%) surveyed entrepreneurs believe that our country is already in recession or expect the economic crisis to hit Poland within a year or two, which is a significant increase compared to last year’s Intrum survey (48%).

There is a cure for the crisis?

There is also some comfort in the data collected by Intrum. Compared to their European colleagues (especially those from southern countries such as Spain, Italy, Greece) – Polish entrepreneurs have fared better in the corna-crisis, primarily because they have started to act quickly. Companies in our country are taking action and implementing tools that would not have happened if not for the pandemic. They are primarily put their trust in the digitalization of business, i.e. they are changing their business model to one that is necessary in the covid-reality.

Companies that took part in our survey declare that they have taken specific actions to prepare themselves for the recession. The top three such solutions implemented by companies in the SME sector include: cutting operating costs, being more cautious about incurring financial liabilities in the future, and ensuring that customers pay on time. For larger companies and corporations, it is additionally important to identify those areas of business that are exposed to the crisis.

The payment gap has narrowed. Why?

Because of the covid-restrictions many companies, especially those in the SME sector, stopped operating overnight in the early weeks of the pandemic, affecting their revenue and having trouble meeting their financial obligations on time. And here’s a surprise. However, as the Intrum report shows, over the past 12 months, the payment gap, i.e. the difference between the payment terms offered and the time it takes customers to actually pay, has narrowed in our country. The largest decrease is in the public sector –20 days (payment gap is 9 days), followed by the B2B sector
– 17 days (payment gap: 10 days). Consumers are the most reliable payers. In the B2C sector, the payment gap
is 8 days and has decreased by 10 days since 2020. What has influenced these declines?

First of all, it is important to remember about the government support that entrepreneurs received in the pandemic. These funds secured the liquidity of companies that found themselves in the most difficult situation. It should also be added that entrepreneurs reacted quite quickly to the crisis situation, among others, have introduced a stricter approach to payment terms for the products and services they offer their customers.

More than 15 months of pandemic behind us. What is ahead for Polish entrepreneurs?

Late payments were already one of the main problems of the Polish economy before the pandemic, and the last year has only intensified this negative phenomenon. Customers paying late are a problem for 77% of companies in our country. We asked Polish entrepreneurs what they thought the risk of late/non-payment by customers (potential debtors) of their companies would be over the next 12 months? 64% of respondents believe that this risk will increase. In 2020 “only” 45% of businesses felt this way, and in 2019, in “pre-pandemic times”, 10 percent did.

Polish entrepreneurs know that their financial health in the months ahead depends largely on whether consumers have the money to return to the stores and lifestyles they know from the “pre-pandemic times”. Unfortunately, the corona-crisis has reduced the incomes of 45% of our society. This means that some consumers are having, and will have in the near future, trouble making timely payments for the goods and services they purchase. Entrepreneurs are also aware of this. 61% of Polish companies are now more concerned than ever about consumers’ ability to pay on time. In turn, among the most important challenges faced by consumers wishing to pay their debts on time and in full over the next 12 months, entrepreneurs listed in first place problems with consumers’ (potential debtors’) liquidity in connection with the negative impact of the Covid-19 pandemic. Time will tell whether these fears were right.

About the report:

The European Payment Report 2021 outline how late payments impact business outlook in 29 European countries. This year’s findings paint a mixed picture of the European economy.

The insights are based on a survey of more than 11,000 companies in 29 European countries, conducted between 25th of January and 16th of April 2021.

Author:

Krzysztof Krauze, President of the Board of Intrum in Poland

Last Updated on July 12, 2021 by Łukasz