Steepening Ethical Deterioration in Society's Fabric
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German Payment Discipline Plummets in Q3 2023
Oops! It seems that the wallets of German companies are feeling the squeeze these days. According to a deep dive by credit company Creditreform, the average payment default for Q3 2023 has climber to a hefty 8.4 days – a full 80% higher than the same period the previous year (7.6 days).
The Bottom Line Runs Dry
Patrik-Ludwig Hantzsch, the economic research kingpin at Creditreform, plops the blame on the current recession and resulting lack of liquidity for a majority of companies. To make matters worse, many businesses are racing to repay state aid they received during the coronavirus pandemic. Hantzsch expects that this depleted liquidity, especially among small and medium-sized enterprises, will continue to worsen.
Staying Ahead of the Default Game
The good news? Southern Germany is still the reigning champ of timely payments, with Bavaria boasting a payment default of just 6.9 days, while Baden-Württemberg clocks in at an only somewhat worrisome 7.3 days. The bad news? Schleswig-Holstein and Mecklenburg-Vorpommern are stumbling in the race, with payment defaults of 11.2 and 11.5 days, respectively.
When it comes to industries, companies in the construction sector are not exactly making the accountants happy, with an average payment default of 12.6 days. The situation in the wholesale sector has gone from bad to worse, with a default increase of 2.7 days to 9.4 days. However, businesses in the chemical and plastics industry are still making their payments on time, with an average of just 5.3 days overdue.
Behind the Scenes of Declining Payment Discipline
While the specific reasons for Germany's declining payment discipline in Q3 2023 aren't entirely clear, several factors may have contributed to this situation. These could include economic conditions, regulatory changes, industry-specific challenges, or regional factors. A thorough analysis of data and reports on German payment discipline in Q3 2023 would be necessary for a more detailed answer.
- In the face of financial struggles, many German businesses are grappling with increased payment defaults, as evidenced by the 8.4-day average payment default in Q3 2023, a significant jump from the same period the previous year.
- With small and medium-sized enterprises likely to be particularly affected by this depleted liquidity, finance professionals may need to closely monitor the business landscape and adjust their strategies accordingly.