Corporate Cutbacks Reach Four-Year Peak as Optimism Rises

The Great European Cut‑Costs Saga of 2024

Picture this: almost half the companies in Europe are tightening their belts in 2024, and that’s the biggest spike we’ve seen since 2021. Intrum’s 27th Annual European Payment Report – the go‑to source for credit‑management vibes across 20 markets – says 41% of businesses are planning to slash costs.

Why the countdown to “Cost‑Cutting” has started ticking again

Intrum surveyed 9,255 firms across 25 European countries to see how their day‑to‑day grind has changed over the past 18 months of economic migraines. After a streak of uncertainty and a wild ride through the cost‑of‑living crisis, Europe’s inflation finally eased – 3.2% in the UK and 2.4% in the Eurozone in March 2024.

More executives are feeling the positive vibes now. 31% say their business has gotten stronger over the last year (up from 24% in 2022). And let’s not forget that 55% believe their business has room to grow in the coming years.

But caution still lingers

The big economy still seems to have a rainy cloud cloud overhead. 61% of respondents aren’t expecting interest rates to drop for at least another year, even though the ECB might be ready to dial them back sooner.

Cost‑cutting is going mainstream

This is the third year in a row that firms are planning to trim their expenses. It climbed from 28% in 2021 to a new high of 41% now.

34% are pressing themselves to ask suppliers for longer payment terms or to cash in on delayed payment.
Another 15% will start extending payment terms this year to weather the economic storms.
Conversely, 8% are trimming the duration they give their customers a break.

Meanwhile, the southern and western parts of Europe relish the chance to stretch out payment terms:

Spain: 20%
Italy: 19%
Portugal: 18%
France: 17%
Denmark: 17%

When late payments become a full‑time chase

Longer payment terms aren’t just a convenience – they’re an obsession. Across the continent, the average business spends more than a quarter of its working days (over 73 days) falling down the rabbit hole of chasing late invoices – a huge chunk that could be spent on growth or innovation.

What does this mean? Businesses are owed a mind‑boggling €10.5 trillion – equivalent to the combined GDP of France, Germany, and the UK. That’s about 30% of European GDP, putting a huge dent in cash flows.

Industry giants are waiting on an average of €5.1m.
SMEs hold an average of €448,000.
The most indebted sectors are government/public (€5.135bn), banking/finance (€3.782bn), and insurance (€2.813bn).

Intrum’s CEO warns of a looming spiral

“We’re watching cost‑savings pile up for thousands of businesses this year. It’s the worst moment in the last five years,” said Andrés Rubio, President & CEO of Intrum. “Companies are cutting costs and asking for stretchier payment terms just while insolvency numbers keep climbing.”

Rubio added that many executives feel the weight of recent turbulence. “We need to help them recover what they’re owed and push suppliers & customers to pay on time – otherwise growth stalls and cost‑cuts become the only lifeline.”

“Governments and industry players must step up to ensure businesses get the support they need and that on‑time payments become the norm,” Rubio stressed. “Otherwise we’re trapped in a vicious cycle of unresolved credit commitments.”