European Professional Services hit hard by bad debt

A survey of almost 6,000 businesses across Europe shows significant differences in how industry sectors are hit by bad debt and late payments. Businesses in Professional Services on average have to write off 4.5 percent of all transactions whilst businesses in Utilities only write off 1.5 percent. Credit Management Services Group Intrum Justitia believes the situation will worsen in 2012, but that there are protective measures to be made by businesses, measures essential to boosting Europe. This is reported in the EPI 2011 Industry White Paper.

 | Source: Intrum Justitia AB Intrum Justitia AB

Stockholm, 2011-11-21 08:00 CET (GLOBE NEWSWIRE) --  

European Businesses write off a record total € 312 billion or 2.7 percent of all transactions. However, this burden is not spread evenly across the different industry sectors – the industry hardest hit, Professional Services (For example Accountants, Law Firms and Recruitment Industry) write off three times the percentage of sales of Utilities (Gas, Water and Energy). Construction & Building, Real Estate and Education have to write off well above average, whilst Transportation and Business Services are doing better than the average.

“Our survey indicates that things will start turning worse before they turn for the better. Professional Services are often first hit by client budget cuts, which means they serve as a warning of what may lie ahead. Unfortunately, history tells us that other Industries are to show significantly higher bad debt next year,” says Intrum Justitia CEO, Lars Wollung.

Professional Services also see the largest increase in write offs from the previous year, up 12.5 percent. Transportation write offs are also increasing fast, 9.5 percent up from previous year, although from a rather modest level. Real Estate see write offs decreasing significantly, with over 5 percent.

”Although the picture painted in our report may seem grim there are measures companies can take to protect themselves. There is a lot that can be done to help the businesses in boosting Europe. We see that businesses that know their customers and implement efficient credit policies get paid earlier and have to write off a smaller percentage off sales, comments Lars Wollung.”

Key findings from the EPI 2011 Industry White Paper

 
Industry sector		 Written off percentage 2011 Development 2010-2011 percentage change
Professional Services 4,5 12,5
Real Estate 3,8 -5
Education 3,7 5,7
Construction & Building 3,6 5,8
Financial Services 3,1 3,3
Health industry 2,9 7,4
Telecom 2,7 0
Media 2,6 4
Manufacturing 2,5 4,2
Wholesale & Retail 2,4 -4
Business Services 2,3 4,5
Transport 2,3 9,5
Utilities 1,5 0

To get the EPI Industry White Paper in full, please visit us at www.intrum.com

How can you boost your company?

Intrum Justitia recommends: 

  1. Create and implement a solid credit policy to manage your risks and increase revenue
  2. Follow up on every step in your credit management process
  3. Make sure you identified the customer you are doing business with
  4. Make a clear agreement with your customer stating all conditions for your business
  5. Integrate sales, marketing and financial department in avoiding defaults
  6. Implement customer address checks regularly
  7. Monitor economic & industry information, and the solvency of key customers
  8. Implement swift reminders and possibly charge default interest
  9. Always extend and balance your customer structure
  10. Never, ever wait, always take immediate action to get paid


About Intrum Justitia
Intrum Justitia is Europe’s leading Credit Management Services (CMS) group and offers services designed to measurably improve clients’ cash flows and long-term profitability, including purchase of receivables. Founded in 1923, Intrum Justitia has some 3,300 employees in 22 countries. Consolidated revenues amounted to SEK 3.8 billion in 2010. Intrum Justitia AB has been listed on NASDAQ OMX Stockholm since 2002. For further information, please visit www.intrum.com


About the European Payment Index 2011 Industry White Paper
The survey was conducted simultaneously in 25 countries earlier in 2011. The survey was conducted in written form and almost 6,000 companies responded. This is the seventh year that Intrum Justitia has run the survey.

The questionnaire was translated into the respective national languages. Dispatch and return of the questionnaires were carried out on a decentralized basis by the countries concerned, whereas the analysis was carried out centrally in accordance with predetermined guidelines. All information has been verified and uncertainties were not included in the evaluation. Furthermore, not all anonymously sent questionnaires were taken into account for the evaluation. Companies in England, Wales, Scotland and Ireland were questioned online by a specialized company (BING Research).

 

For further information, please contact:

Madeleine Bosch, Head of EPI Research, Intrum Justitia
Tel: 0031 70 452 7323
Mobile: 0031 64 6212 579
Email: m.bosch@intrum.com

Annika Billberg, IR & Communications Director
Direct: + 46 8 546 102 03
Mobile: + 46 702 67 97 91
E-mail: a.billberg@intrum.com

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