According to a study published by the KPMG firm, around 3.5 out of 10 invoices were overdue for more than ten days on April 10 against 1.9 out of 10 before the confinement which began on March 17. This increase is also observed in other European countries.
In times of crisis, companies ‘cash management is put to the test and the public authorities’ fear of seeing companies withholding their “cash” as a precaution is confirmed. According to a study published by the KPMG firm, the amount of invoices considered unpaid by companies has almost doubled compared to before the crisis in France. In total, 3.5 out of 10 invoices were overdue for more than ten days on April 10 against 1.9 out of 10 before the confinement which began on March 17, according to the study.
According to the site of the specialist software publisher Sidetrade used by the audit and consulting firm, more than a third of invoices in France were unpaid (35.1%) as of May 2. An increase of 82% compared to before the coronavirus pandemic.
“New abnormal practices”
On the side of European neighbors, the finding is even more glaring. In Italy the increase is 122%, but from a lower base. In contrast, only 28.7% of the value of invoices was unpaid as of May 2. In the United Kingdom, the increase is only 41.6% but unpaid debts were already higher there, so much so that they reached a proportion of 43% on May 2.
Payment deadlines: incidents have exploded since the start of containment
KPMG also notes that “the number of invoices paid weekly” has fallen by 12% compared to the period before containment. With the lengthening of payment terms, “the economic crisis caused by the Covid-19 pandemic is fundamentally changing the way companies manage and manage their cash,” says KPMG. Who emphasizes: “This is a major impact for inter-company credit. “
After noticing an increase in payment terms and to prevent the economy from seizing up, the government set up a crisis committee on the subject at the end of March. He warned at the beginning of May against “new abnormal practices”. In particular, the lack of validation of invoices and delays in the issuance of purchase orders from certain companies.
KPMG expects a gradual resumption of activity by October. With, by then, a “behavior of customer settlements” which “remains degraded due to the impacts of the crisis”.