Late payment and defaults threaten the viability of companies

Covid-19 has triggered the delinquency of companies and has pushed it back in just a few months to levels of 2015 for Public Administrations (AA. PP.) And 2016 for the private sector, which endangers the viability of many business. Specifically, the average payment period has risen both in the public sector (in more than seven days) and in the private sector (adds four more days), both equaling the 77 days in 2020, according to a report published today by the Platform Multisectorial against delinquency, which warns that this trend could predict an acceleration of the worsening of the Administration payments compared to those of the private sector. In this way, the current average payment terms are even further away from those established by law: 30 days for AAs. PP. and 60 for companies.

But what is even more worrying is that the number of defaults increased in 2020 for 31% of companies, which is the prelude to the closure of many of them. Thus, the unpaid ratio (amount of unpaid invoices between sales imports) rose in just one year to 5.4%, 2.3 points more than in 2019, well above the level considered normal, which has to be below 2% or 2.5%.

If this current situation of late payments continues, 16% of the companies surveyed consider their business unviable, so they will have to close it, according to this report. This situation, moreover, has no prospect of reversing, since almost half of the companies believe that their deadlines will worsen during 2021.

Those who break the law the most are precisely the largest companies (those with a turnover of more than 50 million): 81% pay outside the legal deadline and, therefore, only 19% comply. On the contrary, 42% of SMEs pay well, within 60 regulatory days.

The president of the platform against delinquency, Antoni Cañete, warned at a press conference that if the Ibex 35 companies paid within the deadline set by Spanish and European law they would have to inject 56,488 million euros, an amount that would rise to 80,000 million if it is extended to companies in the continuous market.

In turn, if the Administration paid its invoices in the 30 days that correspond to them, they would irrigate the companies with another 8,000 million, according to Cañete, who denounced that the payment terms in the public sector cannot be extended further when they are They need and asked to approve with the utmost urgency a sanctioning regime to end this malpractice. In addition, he demanded that the Government ask the administrations to pay urgently within the established deadlines, which, in his opinion, would save many businesses and jobs.

Contracts in fraud

In addition to the worsening of payment terms, the permanence of abusive conditions is also noted. Last year, 62% of the suppliers had commercial contracts or agreements with clients (from the public and private sectors) that imposed payment terms exceeding the 60 days established by law.

To this is also added the worrying fact that, in the event of defaults, 87% of suppliers never or almost never demanded late payment interest from their delinquent clients and 94% of suppliers did not demand legal compensation for costs of recovery in case of delay or non-payment.

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