Germany Corporate Payment Survey 2020:German companies have switched to “crisismode” and offer less payment terms

  This is the fourth edition of Coface’s survey on corporate payment experience in Germany, conducted in July and early-August 2020, with 753 participating companies located in Germany. Unsurprisingly, COVID-19 and its effects on the global and German economy is the predominant topic of this survey. One major finding is that German companies are getting worried. This year, only 62% of participants offered payment terms, which is significantly less than the 81% in 2019 (2017: 83%, 2016: 84%). It is difficult to clearly assess if the lack of payment terms is exclusively the result of COVID-19, or if this is part of a general “new normality”. This can only be clarified by the data of the following years. Nevertheless, this year, more customers pointed to the tight liquidity of the market or explicitly named COVID-19 and its effects1 as the main reasons for offering payment terms. The preference for shorter payment terms increased. Half of the surveyed companies requested payments to be made between 0 and 30 days.

  However, even with these concerns, the current theme of “we stick together” - which is hanging from almost every child’s window in Germany - seems to be a mantra in the corporate world as well. The discipline to pay on time increased in 2020, possibly because financial difficulties surged due to COVID-19, and that in the current context, too long and/or too many payment delays could send a company into insolvency. In 2019, 85% of companies reported payment delays compared to 68% in 2020. While the payment delay time was only reduced by one day on average for all respondents between 2019 and 2020, the outlook is very different from one sector to another.