Germany Payment Survey 2019: Turn of the tide
This is the third edition of Coface’s survey on payment experience in Germany, done this summer, with 442 participating companies located in Germany. Our survey highlights that Germany is in a changing phase. The pressure on companies due to international competition is getting stronger. This is one of the reasons why German companies have increased their average credit period from 29.8 days to 35.9 days between 2017 and 2019.
Another one is that credit risks are insured. However, the confidence of the companies in their customers decreased. Short-term credit periods still dominate the market. 87% of the surveyed companies request that payments be made within 60 days, which is very short in international comparison (in our Poland payment survey1 64% of the companies requested payments within 60 days in 2019; in our China payment survey the share of companies was below 50% and in Morocco it was only 16%).
For payment delays, we notice a change towards more delays in our survey, but shorter ones. In 2019, 85% of all companies reported payment delays, compared to 78% in 2017. However, the average payment delay in number of days has decreased by almost 6 days, from 41.4 days to 35.5 days during this time-period on average. To understand this figure, it has to be seen in combination with the payment terms. Due to the difficult environment for some companies, their customers asked for longer payment terms (on average 6 days). As in Germany paying in time is a virtue, these companies still are working hard to meet the payment terms. In the end, they still manage to pay in the same time as in 2017, but due the extension of the payment terms, the payment delay is 6 days shorter.
Nevertheless, the question is how long the companies can keep up with this, as the expectations towards the size of the outstanding receivables over the next 12 months has changed. With one exception, almost all sectors and companies expect an increase in their outstanding receivables in the future, which represents a big change compared to 2017, when the majority still saw a decrease in the outstanding receivables. This is also mirrored by the economic expectations, which clouded significantly in the last years. 30% of all companies are saying that the economic outlook for this year worsened compared to 2018, only 20% are positive about their business outlook in 2019.
The most pessimistic are the automotive sector, the metal industry (which is a big supplier for the automotive sector) and the textile-clothing sector. An interesting aspect is that in 2017, the automotive sector was the most optimistic for the business outlook and on average for all sectors the sentiment was quite good with 21 balance points. The changes between 2017 and this summer are that the global (political) risks have increased. Almost 20% of the companies see the US-Sino trade conflict as the main risk for their export business, followed by the Brexit with a share of 15%. In 2017, only 3% of the companies were concerned by the exit of the United Kingdom out of the European Union.