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Control Debtors to Ensure the Viability of your Business

It is not a topic that we like to talk about a lot, but it is the order of the day, more than we would like.

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It is not a topic that we like to talk about a lot, but it is the order of the day, more than we would like. And the data is a bit alarming: the delinquency threatens the viability of 30% of Spanish SMEs. It says the multinational Intrum, provider of credit and asset management services and author of the European Payments Report.

Among other data, 51% of Spanish companies receive requests to accept longer payment periods. Of these, 42% end up yielding to their customers and agree to extend payment terms, especially when it comes to large multinationals. “Six out of ten European companies recognize paying late systematically, only 15% of organizations consider that the debtor risk will decrease in the next 12 months, 64% of the Spanish companies surveyed have accepted delayed payments from multinationals, a 20% more than they did in 2017. Spanish companies lose only 0.7% of their annual income due to non-payments, 1.3 points less than in 2017. “

IMPACT ON LIQUIDITY

The aforementioned report points out that “four out of ten companies fear that the delay in payments will have a negative impact on their liquidity and 30% warn that this situation endangers their growth.” Also, a quarter of the organizations claim that receiving your payments on time could hire more professionals, while 39% say they see their income reduced as a result of late payments. “

According to Intrum experts, although the payment delays faced by many Spanish SMEs is one of the main risks that can ruin the success of a business, there are three payment obligations that companies must take into account in their balance business to avoid financial difficulties:

1. SHORT TERM FINANCING

“One of the most common mistakes of organizations is to finance long-term projects with short-term instruments, with the risk of having to amortize the loan before the investment itself has begun to bear fruit, creating serious problems of liquidity in the company “.

2. DEADLINES AND DOMICILED DEBTS

“These are the so-called ‘drop-by-drop’ debts, that is, those that are paid little by little.In this option, which in some cases may be attractive to the company, the interests derived from this type of investment must be taken into account. financing, as they could outperform capital “.

3. REQUEST CREDITS IN OTHER CURRENCIES

“These products, indicated mainly for companies that carry out import or export operations of goods and / or services, aim to obtain a more economic financing than would be obtained by requesting the loan in euros, but their risks are high. , since the chosen currencies (dollars, Swiss francs or yen, usually) are quoted daily in the market and their quotas can fluctuate sharply over time, for this reason, they demand a greater follow-up on the part of the titular company”.

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