The scale of the problem
Research shows that around 60% of companies in Poland experience late payments from their customers. Only some businesses say they have no such problems, and nearly 15% of companies admit that arrears significantly disrupt their cash flow.
What is more, for many of the smallest firms, even arrears of PLN 5,000-20,000 can be critical - if they represent a significant share of monthly revenue and remain outstanding for more than 60 days.
Main causes of payment problems
- Companies extend payment terms, treating subcontractors or customers as a source of interest-free trade credit.
- Many business owners lack meticulous control over their cash flow - some do not know how much other companies actually owe them or how much they owe to others.
- Smaller businesses have a weak negotiating position - they often cannot force the timely settlement of invoices.
- Industry specifics: businesses operating in highly seasonal sectors or dependent on large customers often have difficulty enforcing payment.
Consequences for businesses
- Cash flow disruption - business owners who are themselves waiting to be paid may fall behind with their own obligations: taxes, Social Insurance Institution (ZUS) contributions or salaries.
- Operational risk - delayed payments limit the ability to invest, grow the business and take on new projects.
- Financial costs - the need to finance day-to-day operations with external loans or borrowing, which may be more expensive than the "trade credit" used by the customer.
- Legal and reputational risk - court disputes, debt collection and loss of reputation among partners and clients.
How to protect yourself - recommendations
- Introduce procedures for assessing customer risk - analyse payment history and use credit reports.
- Set clear payment terms - short deadlines, interest on late payment and penalty clauses in contracts.
- Secure yourself formally - factoring, prepayments, bank guarantees and security provisions in contracts.
- Monitor receivables and react quickly - automatic reminders, receivables management systems and debt collection.
- Make use of legal and advisory support - contract analysis, advice in the event of a dispute and financial optimisation of the company.
Our comment
Late payments are becoming the norm, not the exception. This is a challenge that affects small and medium-sized enterprises in particular. But awareness of the problem and the introduction of effective receivables management mechanisms can significantly reduce the risk of financial turbulence.
At Global Tax Partners, we help build such mechanisms: from risk assessment, through contract preparation, to effective debt collection.
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