Deterioration of Ethical Standards
Rewritten Article:
Germany's companies have shown a noticeable decline in their payment discipline during the third quarter of this year, according to an analysis by credit agency Creditreform. The average cross-industry payment delay stands at 8.4 days (up from 7.6 days in the same period last year), as calculated by comparing the agreed payment term to the actual payment received.
Liquidity Crunch Plagues Businesses
Patrik-Ludwig Hantzsch, head of economic research at Creditreform, attributes this payment delay trend to recurring liquidity struggles among numerous companies due to the ongoing economic downturn. Furthermore, many firms are grappling with the repayment of state-subsidies they received during the COVID-19 pandemic, with Hantzsch predicting a progressive depletion of liquidity, particularly within small and medium-sized enterprises.
Exemplary payment discipline is observed in southern Germany, with Bavaria boasting a default of 6.9 days (well below the national average) and Baden-Württemberg recording a default of 7.3 days. Conversely, the weakest payment discipline is found in Schleswig-Holstein with a default of 11.2 days and Mecklenburg-Vorpommern registering a default of 11.5 days.
The construction sector emerges as the slowest at settling their accounts, with an average payment delay of 12.6 days. Notably, the wholesale sector sees a significant increase in payment delays, with a default of 9.4 days compared to 6.7 days last year. Surprisingly, companies in the chemical and plastics industry display the least delays, averaging just 5.3 days of overdue payments.
Economic instability, regional variations, industry-specific factors, and government policies can shape the payment discipline landscape. For instance, during times of economic instability, businesses may find it challenging to meet their financial obligations, leading to worse payment discipline. Moreover, regional variations can significantly impact payment discipline, with strong industrial hubs and service-oriented economies experiencing different challenges.
Without specific data on payment discipline for these periods, it's difficult to provide a thorough comparison. However, understanding these factors can provide valuable insights into why payment discipline may fluctuate over time and across different regions and industries.
- The study by Creditreform reveals that Bavaria, a region in southern Germany, has displayed exemplary payment discipline with an average delay of only 6.9 days.
- Liquidity struggles due to the ongoing economic downturn and repayment issues of state-subsidies received during the COVID-19 pandemic have contributed to the observed increase in payment delays across numerous German companies.
- The wholesale sector has shown a significant increase in payment delays, with an average delay of 9.4 days, contrasting the chemical and plastics industry that averages just 5.3 days of overdue payments.
- Understanding factors such as economic instability, regional variations, industry-specific factors, and government policies can offer insights into why the landscape of payment discipline can fluctuate over time and across different regions and industries in Germany.
