Payment Survey in Germany for 2023: A Return to Bad Old Times

Unlike last year, the latest Coface survey on payment experiences of companies in Germany for 2023 was not influenced by special events such as the COVID-19 pandemic or the onset of the war in Ukraine and the resulting pressures on commodity prices. This has led to normalization, and payment figures for 2023 have approached pre-pandemic levels. More companies offered payment terms in 2023 (79 percent of all participants), compared to 2019 (81 percent). The general tendency towards short credit terms in Germany remained unchanged: more than half of the surveyed companies required payments to be made within 30 days in 2023, while ultra-long credit terms (120+ days) remained rare.

The figures for payment delays show how much government support measures have helped companies in recent years. Indeed, now that almost all COVID-19 related support measures have ended and the impact of energy subsidies has leveled off, the number of companies reporting payment delays has normalized and increased to a share of 76 percent in 2023, significantly above the period 2020-2022, but not as high as in 2019 (85 percent). However, it is worth noting that levels in the automotive industry, transport, and ICT are above pre-pandemic levels.

The average duration of payment delays has increased to 30.1 days in 2023 (+1.4 days compared to 2022), which is still significantly below the pre-pandemic average of 39.7 days. Most sectors (excluding wood processing, construction, and textiles) recorded an increase in the duration of payment delays. With an average of 22 days, companies in the paper packaging sector waited the shortest this year, while companies in the financial sector had to be the most patient with an average delay of 39.2 days.

Pessimistic Outlooks and Increasing Risk Reduction Strategies

Although payment behavior remains in relatively good shape even after this deterioration, companies are very pessimistic about their business prospects. The attitude towards their current business situation is particularly negative this year, as only 13 percent of participants believe their situation is better than in 2022, while 41 percent believe it is worse.

The outlook for 2024 is also not bright. Only 20 percent of participants expect a business recovery, while 28 percent are preparing for an even worse forecast. Although the impact of individual major risks, such as disruptions in global supply chains, has decreased, the number of risks simultaneously affecting companies is increasing.

In this environment, Germany has lost support as a good business location compared to 2022, while the United States and Eastern Europe have gained popularity. China has also become somewhat more attractive, but its support has historically remained at a very low level. This is also a result of risk reduction strategies by German companies trying to reduce their business dependence on individual countries, suppliers, or customers. This year, already 12 percent of participating companies are opting for risk reduction, with the textile clothing sector being the most affected. In the next three years, 25 percent of all German companies in our survey expect to use a risk reduction strategy for their business.