Intrum: Growth of Hungarian companies held back by non-paying customers and credit debts

Hungarian companies are hampered in their growth by non-paying customers and credit debts, according to the representative of Intrum European Payment Report 2022 (EPR), which was published at MTI Wednesday.

In the survey, 43% of Hungarian respondents said they could not hire new workers due to non-payments, and 41% were unable to make other types of new investments. In many cases, late payments also threaten the current operation of the business: 35% of executives said that late payments could lead to layoffs in their company, while 32% said that the very existence of the company could be threatened. Hungarian companies managed to reduce losses due to non-payment to a lesser extent than the European average and than in the other Visegrád countries.

Now in its 24th edition, the survey surveyed more than 11,000 companies in 15 countries. According to the survey, the proportion of firms in Hungary that increased their losses on non-performing loans and those that reduced their revenue loss on bad debts was the same as last year (31%). This is a worse result compared to the European average, as the continent as a whole was characterized by lower loan losses in 2021. Hungarian companies also fared less well compared to other countries in Visegrád, with a much larger decline in losses in the Czech Republic. Czech Republic and Slovakia, and a similar decline in Poland, but slightly less than in Hungary.

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Judit Üveges, Intrum’s sales director, said in the statement that the Hungarian company’s executives said the liquidity problems were mainly caused by late customer payments. Despite Hungarian businesses setting relatively long payment terms compared to other countries, more than half of respondents give retail customers more than 20 days to pay, and even longer terms are common for corporate counterparties.

According to most respondents, the longer lead times were primarily necessary to retain customers, and given deteriorating global economic trends, it is safer to extend the lead times. According to Üveges, personalized payment solutions are less common in Hungarian companies. In Hungary, the most well-known default prevention measure is loan pre-funding, with 48% of respondents using some form of this solution.

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About a third of Hungarian managers only check the creditworthiness of their client, a similar proportion in Europe, 23% using a credit guarantee agreement and 15% opting for a bank loan guarantee. However, more than half of respondents are unhappy with the solutions currently in place, with 54% saying new legislation is needed to tackle late payments.

The European claims management group produces its annual European Payments Report, for which it collected data from 11,007 companies in 29 European countries on their financial performance between January 14 and April 12 this year.

Image selected via Intrum website