Swiss companies are gearing up for the cashless society
Is Covid-19 leading us into a recession in Switzerland? 70 percent of the Swiss companies surveyed think so. However, in addition to looking to the future with concern, a majority of companies believe that Switzerland will be cashless in five years.
80 percent of Swiss companies accept longer payment terms because they do not want to jeopardize customer relationships and because payment defaults have a massive impact on companies. This is one of the findings of the Switzerland country report as part of the European Payment Report 2020, a statistical survey of payment behavior in Europe and Switzerland by the debt collection service provider Intrum AG.
Longer payment periods and their consequences
8 out of 10 Swiss companies say they accept longer payment periods in order not to jeopardize their customer relationships. That is 11 percent more than the European average. At the same time, three quarters of companies consider punctual payments to be a decisive factor in building and maintaining the trust of partners and suppliers. But what are the consequences of longer payment periods? More than half of the companies surveyed (SMEs: 54%, large companies: 51%) fear liquidity bottlenecks, which threaten the existence of just under half of SMEs (45%). As a result, 44 percent of SMEs and 49 percent of large companies are hiring fewer staff.
Higher investment in prevention
What if this were not the case? If companies' bills were paid more quickly? 67 percent of the Swiss companies surveyed said that this would give them scope to expand their range of products and services, and that they would drive innovation by means of a digital strategy (66%). 59 percent would hire more employees as well as expand their market area geographically (64%). Compared to the European average, Switzerland is higher in all values: Swiss companies therefore also invest more heavily in preventive measures than their European counterparts, so that payment defaults do not occur in the first place.
Prevention is carried out by means of credit checks: 40 percent of the Swiss companies surveyed rely on this measure. About one-third (36%) use debt collection or credit insurance (30%). In Europe, one-third (31%) said they use advance payments for prevention; in Switzerland, this seems to be less popular: only 22 percent use this instrument in our country.
Possible consequences of a recession
Are we currently already in a recession? Of the Swiss companies surveyed, 92 percent stated that our country is already in a recession or that one is expected within the next two years. This is a pessimistic outlook that calls for caution. As a result, 34 percent of SMEs and 30 percent of large companies want to identify particularly risky business areas and take on less debt (34%). In addition, large companies in particular are reducing their costs: 39 percent said they were planning cost-cutting measures.
Cashless society: Soon, but also with risks
Covid-19 is a driver for a cashless society: 69 percent of the Swiss companies surveyed expect Switzerland to be cashless within five years. This is 20 percent more than in the previous year and shows that the current crisis is driving many changes at record speed. What are the possible consequences of this development? 64 percent fear operational risks or higher transaction costs (61%), and the risk of cyber attacks is also rated as relatively high at 61%.
Source and further information: Intrum AG
