Triggered inflation drives delinquency: "The situation is going to get worse than we imagined"

• The problem of delinquency in SMEs: 280,000 million euros uncollected from their clients

Perfect storm.

, which represents nearly

, defines the

situation faced by companies in Spain in the face of rising costs, the imminent end of the bankruptcy moratorium and the change in conditions in the financing guaranteed by the ICO.

"Inflation, the end of the moratorium of the Bankruptcy Law and the changes in the conditions of the ICO Credits could have a

increasing

and the

in a vicious circle with almost no return" warned this Thursday

, president of the platform.

Sources from the organization explain to this medium that there are so many variables that can cause an increase in delinquency in the coming months that it is not feasible to predict what increase will occur in the default of companies.

But they do see a "

which will especially affect

."

In fact, in recent months, as prices increased and economic growth slowed down due to the war in Ukraine, an

According to data from

, released this week, the average time it takes for companies to pay their suppliers has risen to

, a maximum since 2013. Although this is the average period agreed upon and does not imply delays with respect to what was signed, it is over the legal term of 90 days.

In addition to the fact that companies increasingly agree to longer periods because they do not believe they can pay sooner,

than that time.

That is to say, in practice, they

, although they have agreed to do so in 97 days on average.

It is cheaper to pay late, since tomorrow's euro is worth less than today's

Antoni Cañete, president of the Platform against Delinquency

The problem is that delays in paying debts are

, which by definition benefits debtors since it

The platform explains it with an example: "suppose that an SME has an account receivable worth 100,000 euros. If its average collection period is 180 days, and inflation is 10%, within 180 days the monetary value of the debt will continue to be 100,000 euros, but the real value of the money received will be 95,000 euros. This happens because

, obtaining a profit by the mere fact of delaying the payment", he points out.

Inflation distorts the lender-debtor relationship and since it is beneficial for the debtor to delay payments,

"The picaresque will also take advantage of the historical situation of inflation and will have a great impact on delinquency levels to a point of almost no return.

by favoring inflation for those with monetary debts, because the benefit it increases if there is no interest cost (

). As commercial debt does not accrue interest, the debtor will tend to increase its financial profitability", they explain.

Penalties for delinquent companies

The future they paint is

: "the financial difficulties for many SMEs and the self-employed will not stop increasing,

and also the

" and there will be "a devastating effect on payment terms and the risk of non-payment in a vicious circle".

To the problems caused by the increase in costs, the Platform adds the

on June 30, which will foreseeably coincide with the entry into force of the new Bankruptcy Law, sponsored by the Ministry of Justice, and which now It is pending in Parliament.

The end of the moratorium implies that all those companies in a bankruptcy situation will again have the obligation to present it, hence a

The Platform described as "

" the latest

, such as the "Create and Grow" Bill and the new payment plan for city council suppliers.

In addition, its president urged to include a "payment agreement" within the Income Agreement in which employers and unions work and recalled that in the field of delinquency the main and definitive tool is to establish a

(Unemployed in Congress for almost two years).

Conforms to The Trust Project criteria

Know more

• Ukraine