The average time it takes to collect payment in Malta has dropped to 83.5 days, according to the Malta Association of Credit Management (MACM)

This is an improvement of 7.43 days compared to last year’s figure of 90.93 days.

However, the figure is still well above the average of 47 days for Europe.

The figures emerge from a survey carried out by the association of the so-called Days Sales Outstanding (DSO) among all its member firms in Malta as at last December.

The average DSO for Malta is very close to that of Cyprus (85 days), Greece (76 days) and Portugal and Spain (83 days), according to the European Payment Index published recently by Intrum Justitia.

“Nevertheless, improvement in the DSO figure indicates an overall improvement in the cash flow and may also have a positive effect on the investment capacity of the Maltese business community to the benefit of the local economy at large,” the association said.

“Accounts receivable – debtors – represent on average about 40 per cent of the total assets shown in the balance sheet of most firms, and these assets are liquid. Therefore, an improvement in the DSO would not only improve the creditworthiness of the firms but would also release financial resources that could be used in further investment in the businesses.”

The DSO represents the average time taken by customers in settling their invoices due to their suppliers. It is composed of two variables – the debtors’ amount and the sales turnover – expressed in collection days.