Public-sector Organisations Worst Offenders for Late Payments in Italy

Online, June 3, 2014 (Newswire.com) - A recent Europe-wide report has revealed no improvement in the pressure on European businesses from customers' late payments, with 55 per cent of businesses across Europe reporting late payments resulting in loss of income.

Businesses in Italy suggest public-sector clients are the worst offenders, with average delays of 85 days. Late payment remains a problem across all sectors, however, with 76 per cent of Italian businesses citing this as causing a squeeze on liquidity.

Luca Borella, a partner at Russell Bedford Bologna member firm Magagnoli & Associati, feels that, for many companies across various sectors, this is the result of public sector contracts under which many companies are reluctant to pursue payment. "In fact, businesses are usually convinced that pursuing the public sector is highly ineffective and expensive, and are, instead, often prepared to wait - suffering financially, losing income and, in turn, causing a 'domino effect', resulting in late payments to other companies not directly involved with the public organisations.

Companies involved in public sector know very well that one of the main reasons for late payments recently is the effect of the Stability and Growth Pact, which created the conditions for the general financial slowdown. Hopefully, this scenario is slowly changing, partly thanks to recent legislation focusing on new rules for public sector payments (Legislative Decree 35/2013), but the situation varies considerably across the country. While regions such as Veneto and Emilia Romagna have paid all outstanding debts due to suppliers, in southern Italy, in particular, the situation remains very difficult. More broadly, of course, this problem is directly related to other initiatives the Italian government is currently trying to put in place - on public spending, improving the general level of confidence on the markets, and in restarting economic growth."