The average payment term for invoices in Spain is still above the legal limit (60 days in the private sector and 30 days in the public sector), but in 2021 there was “a significant decrease”, according to the Multisectoral Platform against Delinquency (PMcM). In its report on last year, the Platform lowers the average payment term for invoices in the private sector to 72 days, compared to 77 in 2020. In the case of the public sector, the average term fell from 77 to 61 days . However, the report warns of the risk of a chain of defaults starting in May, when the grace period for ICO credits granted to around one million companies ends.
From the point of view of Antoni Cañete, president of the PMcM, the improvement in payment terms achieved in 2021 “has a lot to do with the liquidity measures taken by the Government in the face of the covid crisis”, some of them conditioned to compliance with payment deadlines. Thus, both the ICO credits for companies such as the injection of covid funds to autonomous communities and city councils have contributed -according to the Platform- to speed up the payment of invoices. “This shows that aid conditional on paying outstanding bills improve payment terms, although they are still far from the legal maximum,” Cañete explained this Wednesday during the presentation of the results of the report prepared from a survey to 800 small and medium-sized companies representative of the country as a whole.
After welcoming the improvement in payment terms in 2021, the president of the employers’ association warned that the trend could be seriously twisted as of May, when the grace period for ICO credits and SMEs have to start dealing with their return. “When this happens we are going to witness a break in the important payment chain; let us not forget that half a million companies are in bankruptcy risk mainly due to the delay in payments & rdquor ;, warned Cañete.
At the moment, the delinquency ratio of those surveyed (% of defaults with respect to total billing), stood at 4.8% in 2021, slightly lower than the 5.4% in 2020.
“If we don’t take measures that guarantee compliance with payment deadlines, we are going to have delinquency as the main cause of company closures,” added Cañete. From this point of view, the PMcM considers it urgent that the Government allows progress in the processing of the sanctioning regime that has remained stuck in the Congress of Deputies since May 2020.
The big ones, worst payers
For 61% of those surveyed, the type of client by company size that takes the longest to pay them are large companies (those with a turnover of more than 50 million euros). According to those surveyed, 80% of large companies exceed the legal payment term of 60 days: 38% pay between 60 and 90 days, while 42% of large companies pay their invoices in terms of more than 90 days . Only 20% of them pay within the legal term.
In the case of SMEs, the report shows that 49% of them make payments on time; 45% settle their bills within 60 to 90 days, while another 5% exceed that limit.
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In addition, the report notes that in 2021, 66% of suppliers had to accept business contracts or agreements with clients (from the public and private sectors) who imposed payment terms longer than those permitted by law (30 or 60 days, respectively).
Added to this is also the fact that, in the event of non-payment, 83% of providers never or almost never demanded from their delinquent clients the default interest; and 92% of providers did not require the legal compensation of 40 euros for recovery costs in case of delay or non-payment.