Global payment morale at its worst in years

Global payment practices have recently deteriorated more sharply than in the previous seven years combined: In 2022, invoices were paid after an average of 59 days - five days later than in the previous year. Even before that, global payment behavior - with the exception of 2020 - had gradually deteriorated, albeit far less markedly: between 2015 and 2021, the "days of sales outstanding" (DSO), i.e. the period between invoicing and payment, deteriorated by a total of four days. This is the conclusion of the latest study by credit insurer Allianz Trade. "Payment morale is an important predictor of delayed payments and defaults, as well as insolvencies," says Maxime Lemerle, chief insolvency analyst at Allianz Trade. "The longer companies have to wait for their money, the more likely they are to end up sitting on unpaid invoices. Suppliers' role as an invisible bank comes into full play, increasing liquidity risks in the system." 17 % of companies worldwide are not paid for 90 days, and a total of 42 % are paid more than 60 days.

Switzerland: Still relatively good payers

In contrast to some Western European countries, Swiss companies were able to keep payment delays in check. At 57 days in 2022, payment morale remained stable compared to the previous year. "The Swiss have always been said to have a good payment morale," says Jan Möllmann, CEO of Allianz Trade in Switzerland. "The current figures confirm this reputation, even in these difficult times. Nevertheless, this is no guarantee. We are seeing more and more large-scale insolvencies. These can quickly become dangerous for suppliers. That's why they would do well to keep a close eye on the environment and act in good time. Otherwise, the bill will not be paid at all in the end."

Asia-Pacific: payment morale deteriorates most sharply

Customers in the Asia-Pacific region pay particularly late (65 days, +6 days). The main driver here is China, where payment behavior deteriorated particularly sharply in 2022 and DSOs increased by 10 days to 54 days. In the Middle East, companies still have to wait around 64 days for their money. In Western Europe, the average is 56 days (+3 days), in South America (+3 days) and Central and Eastern Europe (+4 days) 51 days each, and in the USA 49 days (+1 day).

The picture is also heterogeneous among the sectors. Payment practices have deteriorated particularly sharply in the transportation equipment sector (+15 days), raw materials (+10 days), electronics and software and IT (+8 days each), pharmaceuticals, food and construction (+7 days each). Overall, companies in the machinery and plant engineering sector (79 days), transportation equipment (77 days), electronics and construction (72 days each) have to wait the longest for their money.

Source: Alliance Trade