The time taken for Portuguese companies and public sector entities to pay clients and service suppliers has reached “worrying proportions” according to a new study.
The public sector, which before the economic and financial crisis had improved its payments situation, is now taking 141 days or five months on average to pay its invoices.
And the percentage of defaults on invoices is also increasing, from 2.7 per cent in 2007/8 to 2.8 per cent last year.
According to the study carried out by Intrum Justitia, an independent business improvement organisation, more bills are being paid within 90 days rather than the standard 30 days, while around 55 per cent of Portuguese companies believe that the risk of payments becoming increasingly delayed will increase over the next 12 months.
Of those surveyed, 91 per cent claimed they were receiving their payments later because creditors were facing increased financial difficulties because of the recession, which had resulted in a reduction in sales, less liquidity and higher interest rates.
Because of the recession, 45 per cent of those companies canvassed stated that they were less confident about getting business development loans and overall credit from the banking sector.
Overall economic recovery in Portugal for 2010 would be slight although there were some encouraging signs that exports were on the up.
According to the Portuguese National Statistics Institute (INE), Portugal’s GDP suffered zero growth in the fourth quarter of 2009 compared to the third quarter where GDP had grown by a modest 0.7 per cent.
In February, Portugal came under the spotlight of the International Monetary Fund and the ratings agencies after the European Union’s Economic Commissioner, Joaquin Almunia, was quoted as having said that Greece, Portugal and Spain were showing clear signs of a permanent loss of competitiveness since joining the EU.
In 2009, after several years of successfully keeping the annual budget deficit to well within three per cent of GDP, Portugal’s budget deficit shot up to 9.3 per cent which lead to the government introducing a package of austerity measures, public sector spending cuts and tax hikes this month. Chris Graeme
