Inflation forces 41% of companies to demand payment in advance

  • Lusa
  • 17 November 2022

"Given concerns about the impact of rising prices and late payment on cash flow, companies are adopting several preventive measures," says the Intrum study released on Thursday.

Around 41% of Portuguese companies are selling with pre-payment as a protective measure against rising inflation and to deal with late payments, according to an Intrum study released on Thursday.

According to Intrum’s European Payment Report (EPR) 2022, a study which covered more than 11,000 companies in 29 countries, it was also possible to learn that inflation was “leaving its mark in Portugal” and that 53% of companies said they were restricting the ability to expand their business, with the European average being 51%.

It continues: “Given concerns about the impact of rising prices and late payment on cash flow, companies are adopting several preventive measures.”

Sales with pre-payment appear at the top of the measures used by 41% of Portuguese companies, two percentage points less than the previous year.

In addition, the study showed that the European average is 46%, up three percentage points compared with 2021 (43%).

The document also stated that another priority for companies is to improve their credit management.

In this sense, the study noted that 48% of companies in Portugal would like to improve the management of late payments, but recognise they have a lack of knowledge and/or lack of resources to do so internally.

In Europe, this figure rises to 53%, the study highlights, adding that many companies overcome this constraint by resorting to external companies specialised in debt recovery, an option that is more frequent among large organisations (31%), compared to Small and Medium-sized Enterprises (SMEs), where only 17% say they have this practice.

This is a reality across all sectors of activity, with particular emphasis on utilities (water, electricity and gas), due to the high number of customers, and the public sector, which in Portugal has not yet adopted this practice.

The study also reveals that 52% of Portuguese companies take legal action against customers who don’t pay debts or have late payments – significantly lower than the average for European companies (57%).

The Covid-19 pandemic continues to have an impact on the lives of companies, but inflation, which has reached record highs in recent decades, has become the “major obstacle to business growth” in 2022, according to the study.

As growth is the main priority of Portuguese companies, Luís Salvaterra, managing director of Intrum Portugal, believes that “given the context in which we live, companies have to adopt measures to combat inflation”.

At Intrum, “we seek solutions for clients that will have to face a troubled and uncertain period”, the manager stressed.