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Published: 14 june 2019 17:24

Recent survey: 30% of companies in Lithuania would hire more employees if not for late payments

Biuras
123rf.com nuotr. / Office work

Almost a third (30 %) of Lithuanian companies would be able to hire more employees if debtors made more operative payments. Nonetheless, 43% of all companies in the country do not take any measures to avoid late payments and unpaid debts. Such data was revealed in the European Payments Report conducted by Intrum, leading credit management company in Europe, a press release from the company states.

In Lithuania, the main reasons for late payments were the financial difficulties of debtors (45%) and deliberate delays (32%). 23% of companies mentioned administrative inefficiency of customers as one of the main reasons for late payments, and for a tenth, it was disputes about the goods or services provided.

To protect themselves against late payments or unpaid debts, companies usually use prepayment practices (45%), execute customer solvency practices (13%) and use credit management companies and debt collectors (13%). By comparison, the creditworthiness of customers in Europe is checked by 28% of companies and a quarter of companies choose external credit and debt expert services. 43% of companies in Lithuania are not taking any measures at all to prevent late payment and overdue debts. That is 11% more than average in Europe.

“The ability to predict cash flow is key to all businesses, as financial stability and growth opportunities largely depend on it. The consequences of overdue accounts may be severe. Business owners can experience liquidity pressure, inability to pay for their suppliers in time, loss of income and even threat to their overall survival. This, in turn, is prohibiting growth and the chance to create new jobs,” says Ilva Valeika, Intrum Managing Director in Baltics.

According to Valeika, businesses and organizations should promote financial responsibility and demand strict compliance with payment terms by their clients and partners. Although payment delays and customer insolvency are always among the business risks, efficient management of accounts and financial processes can help prevent difficult situations and operational losses.

According to the survey, payments in Lithuania delay in average for 2 days. Lithuanian companies give their customers 23 days on average to pay for their bills. This is one of the shortest terms in Europe.

Saulius Matulevičius, management consultant and social anthropology expert, notes that late payments can disrupt the exchange cycle and at the same time create a culture of unreliability and mistrust that can spread and have a negative impact on the region's economy.

"On the other hand, if it is agreed upon the principles of reciprocity, the interaction between credit and debt can act as a productive relationship that combines and benefits both countries," says Matulevičius.

The annual European Payment Survey was carried out in 29 European countries from late January to early April. A total of 12,000 companies participated in a survey, aimed to asses the financial health of European businesses and reveal trends in tax behaviour.

Read the full report: https://www.intrum.lt/epr2019/

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