August 7, 2020

Companies and Administration worsen their payment terms for the first time since 2010


The delinquency During the crisis it took one out of every three companies and, despite the significant improvement that has occurred in recent years, especially in the public sector, for the first time since the crisis it has worsened again. This is confirmed by the Multisectoral Platform against Late Payment, which has published that the private sector worsened its payment terms last year by raising them to 81 days, four more than last year and above the 60 established by the Law. 59% of companies that take longer to pay are large companies, according to the survey carried out by the organization on 700 signatures in January and February 2019.

The public sector also raised them in three days, to 68, being the third year that the Administration pays better than the companies. In any case, since 2010 there was no deterioration in payment terms, which with the return of growth had been progressively falling. In this case it is surprising because since March of last year The new Law on Public Contracts came into force, which hardens the rule against entities that pay late.

In the opinion of the president of this organization, Antoni Cañete, this is because this law has not yet been implemented with all the consequences, which is the responsibility of the Administration. Regarding the deterioration of the payment terms, Cañete attributed it to the worsening of the margins of the companies and the state of the activity. "This is an indicator of something deeper that is happening in the economy," he has analyzed, referring to the slowdown. The Administration came to pay 166 days in 2010: since then, the Supplier Payment Plan and the hardening of the standard reduced the payment period.

Decree for penalties for defaulters

Cañete has warned that, having a Law with maximum terms but no penalties for companies or administrations that do not comply with these limits, Spain risks the rebound of delinquencies at a time when there are economic complications. For this reason he demanded that the Government of Pedro Sanchez approve by decree a sanctioning regime, since the corresponding law that was to develop it – approved unanimously in the project phase– is stranded in the Congress of Deputies before the imminent dissolution of the Cortes.

If the economic situation worsens again, Cañete warned that the delinquent companies will take advantage of this legislation paying late. An example is the increase in labor costs that companies will have to face in the face of the increase in Minimum Interprofessional Salary (SMI), a measure that has been criticized by Cañete as a "populist" decision, since it is not based on the «competitiveness»

Other factors on the horizon that may trigger a sudden worsening of delinquencies are the rise in financing costs that the ECB rate increase, the possible hardening of the tariffs that exist in the albero before the commercial pulse between the US. and the rest of the world or the imminent Brexit.

Scenario worse than 2017

A) Yes, 28% of companies indicate that the payment periods in the private sector have worsened compared to 25% last year, while only 6% say they have improved, by 6% who recognized it in 2017. By type of company, among those who pay late 14% are micro businesses, 26% are SMEs and 59% are large companies. Among large companies, 81% fail to comply with the Law and pay their bills more than 60 days – 39% between 60 and 90 and 42% to more than 90 -.

Beyond, 63% of the contracts signed by the companies are with terms greater than 60 days. "63% of the contracts are illegal, since they violate the prohibition that there is a pact between the parties over what is established by the Law", considers Cañete. Moreover, 58% of companies never demand default interest if there is non-payment and 92% refuse to request legal immense, despite the fact that the Law and Justice would give the reason for the damaged company in these cases.


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