Clients delaying payments? Protect your business from liquidity loss.

Publication Date: 17.09.2024

Jagoda Antoniak
controlling, accounting audits

Delayed payments are one of the most significant challenges faced by Polish entrepreneurs. Currently, the average waiting time for invoice payments is approximately 60 days, and in many cases, it exceeds even 90 days. By the end of 2023, one in three companies in Poland grappled with overdue payments, posing a serious threat to financial liquidity, especially in light of today’s economic challenges.

Why Are Payment Delays a Serious Threat?

The current economic climate, both domestically and globally, has significantly amplified the issue of payment backlogs. Entrepreneurs are now contending with multiple challenges that impact their ability to meet financial obligations on time. The primary factors contributing to the increase in payment delays include:

Skyrocketing inflation – The drastic rise in prices has weakened purchasing power for both businesses and consumers, leading to difficulties in settling payments.
Increasing costs of materials and energy – The rising costs of running a business put pressure on profit margins, affecting financial liquidity for many companies.
Rising minimum wage – The increase in the minimum wage has raised employment costs, especially impacting small and medium-sized enterprises.
Effects of global crises – The pandemic, the war in Ukraine, and natural disasters, including recent flooding in some parts of Poland, have disrupted supply chains and added to market uncertainties.

As a result, payment delays can lead to severe consequences for companies. They not only disrupt financial liquidity but also threaten operational stability, future growth, and ultimately may determine the very continuity of business operations.

How to Protect Your Business from Payment Delays?

Amid challenges such as delayed payments and increasing operational costs, financial analysis plays a crucial role in safeguarding a company’s financial stability. Close monitoring of cash flows and scenario analysis enables entrepreneurs to prepare for various economic scenarios and manage risks more effectively.

Through professional financial analysis, a company can:

Conduct a detailed analysis of revenue structure and client portfolio – This helps identify risks associated with payment delays among different client groups.
Identify the impact of rising costs and payment delays on company finances – Reliable data and forecasts facilitate informed decision-making in managing financial liquidity.
Prepare for potential challenges – Scenario analysis assists in anticipating the effects of further inflation, increasing energy and material costs, and minimum wage hikes.
Optimize cash flows and cash turnover – Detailed financial analysis enables effective cash management, allowing the company to navigate challenging economic environments successfully.

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Clients delaying payments? Protect your business from liquidity loss.

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