Payment behavior

OUR EXPERT'S OPINION

"The gradual deterioration in average late payment, month after month, is a clear signal of cash flow tensions, or even potential default. From a B2B customer credit risk management perspective, the evolution of average late payments is therefore a significant and relevant indicator, particularly for Large Enterprises (LSEs), Intermediate-Sized Enterprises (ISEs), and Small and Medium-sized Enterprises (SMEs)."

- Mikaël Delaporte, Data Collection Manager at Ellisphere

Payment behavior by business sector

After a rather positive 2023 in terms of late payments, a slippage is noted in the 1st quarter of 2024. The biggest deteriorations are seen in the Energy, Arts & Entertainment and Accommodation & Food sectors. A slight improvement was recorded in the Construction sector. However, the sector still has by far the highest average payment delay. With the lowest average payment delay (11.7 days), the Trade sector recorded a +4% deterioration in its average payment delay at the start of 2024.

Focus on one sector, Transport & warehousing: the sector's average payment delay is one of the worst (10.05 days vs. 5.46 days for all sectors combined). However, the average payment delay is significantly better than that of all sectors (16.41 vs. 18.12 days). Moreover, 62% of companies in the sector pay their invoices on time. Despite a rather negative average payment term, the sector's average late payment is average; payment habits in the sector are also rather positive.

Payment habits

In terms of payment habits, the percentage of smaller companies paying by the due date is falling. The percentage of VSEs and SMEs paying on time deteriorated by almost 1 point over Q1 2024. This deterioration in payment habits is reflected in the share of slight delays of 1 to 30 days (+1.77 points). A slight improvement in payment habits has been recorded among ETIs and Large Enterprises (GE). However, these categories remain by far the least rigorous in meeting their payment deadlines, since two-thirds of these companies usually pay between 1 and 30 days late. Even these slight delays have a very negative impact on small businesses. Their cash flow is generally reduced, and this lack of liquidity can lead them to go intodebt to finance a current activity, or even threaten their survival in the long term.

Entrepreneurial dynamism index for commercial companies in France

OUR EXPERT'S OPINION

"In France for the year 2023, Ellisphere's Entrepreneurial Dynamism Index (ratio between business creations and disappearances) calculated for commercial companies is 1.4, compared with 1.6 in 2022, and 1.7 in 2021. At the end of February 2024, on a rolling 12-month basis, the index is still 1.4. However, Ellisphere's forecasts for the current year confirm a continuation of the downward trend, with the index probably at 1.3 by the end of the year, bringing us back to the level of... 2019. "

- Alain Luminel - Head of financial expertise at Ellisphere

Decline in business start-ups combined with an increase in business closures

The continuing decline in entrepreneurial dynamism conceals another, more worrying reality: the gradual increase in the number of commercial companies going out of business. Nearly 192,397 companies disappeared in 2023; by the end of February 2024, over a sliding 12-month period, this figure had risen to nearly 199,000, representing an 8.5% increase in the number of entities concerned. Secondly, 22.5% of these disappearances at the end of February 2024 were the result of judicial liquidations, compared with 22.3% at the end of 2023. This is the worst result since 2015. In parallel with the significant increase in the number of disappearances, the number of business start-ups continues to fall, down -3.9% at end-February 2024 (versus -5.3% at end-2023). This result needs to be qualified, however, in view of the particularly high number of start-ups in 2021 and 2022. Over the past two years, the decline in the Entrepreneurial Dynamism Index has therefore been driven primarily by the very significant increase in company closures.

Insolvency proceedings in Q1 2024

The year 2023 marks a major economic turning point for companies: rising interest rates, economic slowdown, repayment of PGEs... While the inflationary environment generates little growth and alters the cash flow of many companies. The number of business failures has thus - unsurprisingly - risen sharply, after a highly atypical period built around an economic and legal arsenal (the "whatever it takes" approach) which, while it has averted a wave of defaults, has considerably blurred the interpretation of the trend in insolvencies to date... At the end of March 2024, over a sliding 12-month period, 57,633 insolvencies (receiverships and direct judicial liquidations) were recorded in mainland France, representing an increase of almost 29%. At the same time, the French Overseas Departments and Regions (DROM) saw a surge in insolvencies of +39%, or 1,794 companies concerned.

Regional analysis

The upturn in the number of insolvencies continues to vary from region to region. Unsurprisingly, we find the usual trio at the top, namely Ile-de-France, followed by Auvergne-Rhône-Alpes and PACA. The former accounts for 23.4% of all insolvencies, and Auvergne-Rhône-Alpes for 12.3%. The most spared regions appear to be the least economically dynamic (Lorraine, Basse-Normandie, Bourgogne, Limousin). Territorial disparities can also be interpreted by the different degrees of Urssaf collection and, of course, by the sector-specific characteristics of each département. Against this backdrop, Corsica recorded an explosion in the number of insolvencies over the year: +48.4%. This trend should be put into perspective, however, given the small number of structures concerned, i.e. 417.

In the French overseas departments and territories, the number of bankruptcies rose, except in French Guiana (down 18.5% year-on-year) and especially Mayotte (down 32%). A word about this 101st French department, where the overall economy is almost 55% dependent on public value added. The island is suffering from an unprecedented migratory crisis, aggravated by water shortages, security problems and uncontrolled demographics - all structural problems that are making its economy anemic. The situation there is explosive, and here again, in this context, the fall in the number of insolvencies is clearly to be put into perspective.