Businesses in Cyprus have lost €3.3bn in the last 12 months due to late payments in commercial transactions, triggering a cycle of debt that is hampering economic growth and competitiveness.
A recent seminar hosted by the EU Commission Representation in Cyprus highlighted that the EU’s new directive on combating late payment in commercial transactions is expected to alleviate liquidity problems faced by small and medium-sized enterprises (SMEs) and boost their competitiveness at a time of economic crisis in the EU.
According to data from the European Payment Index 2012, the written-off debt suffered by Europe’s businesses has grown to 2.8% of total receivables, reaching a record level of €340bn. The €3.3bn lost in Cyprus during 2011-12 due to late payments represents an increase of 50% on 2008, according to the index.
Head of the Commission Representation, Georgios Markopouliotis, said 57% of European businesses claim to have liquidity problems due to late payments, an increase of 10% since last year. In southern Europe, business- to-business transactions (B2B) are paid in 91 days’ time on average, while in northern countries it takes 31 days. He added that these practices harm the single market, which aims to offer businesses and entrepreneurs equal opportunities in all countries of the EU.
Markopouliotis added that the directive is an important tool in order for SMEs, which account for 99% of European companies and employ 67% of the European workforce, to continue supporting the efforts for growth in the EU.
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