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Late payments: Maltese businesses wait an average of 81 days to get paid

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Maltese business owners take significantly longer than their European counterparts to collect payments, new figures released by the Malta Association of Credit Management show.

It took firms across all business sectors an average of 80.96 days to collect payments they were owed in 2022. That was down from the average 84.6 days it took in 2021, but far behind European averages.

According to a 2022 report published by European credit management service company Intrum, it takes businesses across Europe an average of 51 days to settle their bills, customers an average of 27 days and public sector entities an average of 66 days.

Not a single of the 29 countries surveyed by Intrum reported payment periods approaching 80 days to settle bills. The two that came closest were France and Ireland, which both reported 74-day waits on average to get paid by public sector entities.

The average Days Sales Outstanding ratio, or DSO, is a widely used tool used to represent the average time taken by customers in settling invoices due to their suppliers.

A high DSO figure means a business must wait a long time to receive money owed to it, hurting its cash flow and potentially hindering its future growth.

In a statement announcing the 80.96 days it takes the average Maltese company to collect payments, the MACM noted that when analysing the DSO, companies must keep the bottom line in mind.

Achieving a low DSO at the expense of sales, revenue or customer satisfaction is a poor strategy, it noted.

The MACM also noted that the DSO figure may vary significantly across business sectors or industries, meaning a company should always benchmark its DSO figure against its industry.

The MACM did not provide a breakdown of the local DSO per industry.

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