Czech companies among Europe's most notoriously late payers - survey
The results of a newly released survey by Sweden's Intrum Justitia, one of Europe's leading providers of credit management services, indicate that Czech Republic is one of the riskiest places in Europe to do business, in terms of customers defaulting on payments.
So, as I understand it, this was a survey of 22 countries and involved over 900 companies and it's taken every six months. What is the purpose of the survey?
"It is helpful for our firm because we compile an index of debt, so it's very helpful for us to know the differences between countries. And also we make public this information and can use it in different markets - I mean in the Czech Republic, in different European markets, so, I think that's the main goal."
The survey said that "payment uncertainties" are major obstacles in international trade and that a second major concern is payment terms, also legal uncertainties and market and country risks. The Nordic countries recorded a very low risk but high risks were seen in Portugal, the Czech Republic and Lithuania. What can you tell me about these results?
"We asked about 400 companies in the Czech Republic -- I phoned them and tried to persuade them to collaborate with us -- so I think the results are quite objective in that you can compare it statistically. Yes, I think it's true about this risk in the Czech Republic; that we are in a very bad situation now."
What were some of the questions that you asked companies and was it difficult to get them to respond?
"It was just 20 questions, about a lot of things from normal business concerns, from the normal due date of payments, or if they tried to solve the problem by legal action or..."
"So one question was, for example, how many days do you have to wait to for payment or another question was can you separate your debtors in some categories and these categories depend on the age of the debt, so if it is under or more than 30 days, or more than three months, or over one year. So it depends on age of debt."
"Another question was about the risk of delay with due dates; it means if it is going to be increasing or decreasing, or at the same level. So it's about the prospects."
"Another question was about the reason for the delay, for example, if the debtor has financial problems, or if it was intentional. We had a lot of categories and the clients had to say exactly what their problems were. So there were these types of questions."
Can you remember some of them that were difficult for Czech companies to respond to?
"Yes, I think maybe about cash flow, if they can write the figures, because the cash flow depends on that problem."
And were there any surprises?
"Any surprises... Maybe I was surprised that it is still not common to use another company for sorting out payment problems. I mean like outsourcing the debt.
Using a collection agency?
"Yes, a collection agency. I think it's not common like in other countries - European countries."
And was one of your questions about how businesses collect on late payments, I mean, do they go through the courts, or...
"Yes, it was one question."
There's been a lot written about how slow it is to get a case through the courts...
"Yes, yes. There was a question about how they solve the problem, if they use a legal service."
In the Prague office of Intrum Justitta, were you all surprised to see the high rankings of the Czech Republic on the index as a high-risk place for collecting payments?
"Yes, I can say that I was quite surprised because I couldn't compare it before. But I saw that we are like the medium because I suppose that I can say that generally in the South it is worse. So I was surprised the Czech Republic had such a bad situation concerning the risk index."
