Payment practices will continue to decline in Germany in 2024. 78 percent of the companies surveyed stated that they were affected by late payments. The main reason for concern is invoices that remain due for more than six months. This proportion has risen sharply and is endangering the liquidity of companies. Nevertheless, trust in their own customers remains high: in 2024, eight out of ten companies will offer supplier credit, and the average payment period will remain relatively short at 32 days. These are the results of the current survey by the credit insurer Coface on the payment experiences of German companies. “The close economic ties between Austria and Germany are particularly noticeable when it comes to financial risks – outstanding invoices in Germany represent a direct risk for Austrian companies, as many suppliers for German industry are based here.”
comments Dagmar Koch, Country Manager of Coface Austria.
“Since 2021, the proportion of companies reporting payment delays has increased significantly. From a low of 59 percent to now 78 percent. This is almost the same as before the pandemic.”
says Coface economist Christiane von Berg. In the surveys before 2020, an average of 82 percent of companies reported that payment deadlines had been exceeded.
Long overdue payments become a business risk
The average duration of payment delays increased only slightly to 31 days in 2024. That is still well below the pre-pandemic value of around 40 days. While payment behavior has hardly changed in 2024, credit risks from accumulated payment arrears between six months and two years have increased sharply: 16 percent of the companies surveyed are affected by extremely long overdue payments, which account for two or more percent of their annual sales – an increase of seven percentage points compared to the previous year. Mechanical engineering is badly affected, with 30 percent reporting extremely long overdue payments that account for 2 percent or more of their annual sales. “In our experience, around 80 percent of claims that are more than 180 days overdue worldwide are not paid.”
explains Dagmar Koch and adds: “Payments that are outstanding for an extremely long time therefore represent a significant business risk and can ultimately lead to insolvency, as the significant increase in company insolvencies in recent months shows. It is important to closely monitor outstanding claims, especially in international trade, and to demand late payments quickly and professionally.”
Preference for short loan terms continues
80 percent of German companies will give their customers a payment term, i.e. a supplier credit, in 2024. This value is almost identical to the previous year. Particularly export-oriented sectors such as mechanical engineering (94 percent) and the automotive industry (90 percent) offer payment terms. The general preference for short loan terms in Germany remains unchanged: the average period in 2024 is 32 days, as in the previous year. “In financially and economically challenging times, companies that offer payment terms try to get their money as early as possible in order to improve their own cash flow. “More than half of those surveyed request their money within 30 days.”
says Christiane von Berg. With 21 days and 25 days respectively, the wood industry and the construction industry are asking for payment the earliest, while the automotive industry is acting most generously with 46 days, as in 2023. For comparison: in Poland the average payment period in the last survey was 42 days, in France it was 48 days and in China it was 70 days.
About the survey
The eighth edition of the Coface study on payment experiences of companies in Germany was carried out between June and August 2024. 774 companies from more than 13 diverse industries took part in the survey.
COFACE: FOR TRADE
With 75 years of experience and the densest international network, Coface is a major credit insurer, partner in corporate risk management and in the global economy. With the aim of becoming the most agile credit insurer in the world, Coface supports 100,000 customers in building and dynamically developing businesses. The products and services protect companies in national and international business and help them make credit decisions. In 2023, Coface was active in 100 countries with around 4,970 employees and achieved sales of approximately 1.87 billion euros.