The average time it takes for a business to get paid was 89.04 days in 2016, according to the Malta Association of Credit Management – which would give the island the dubious honour of having the longest payment collection of 30 European countries.

The European Payments Report (which did not rank Malta) recently found that Italy, Greece and Portugal have the longest payment terms for business-to-business transactions, but Malta’s 89.04 days is considerably longer than Italy’s 80 days.

And even though the payment period is ever so slowly improving in Malta, it is still a long way from the European Commission’s recommendation of 60 days for companies and 30 for public authorities.

The Average DSO – Days Sales Outstanding – for Malta was calculated from a survey conducted by the Malta Association of Credit Management (MACM) among its members.

Longer payment periods have a negative effect on businesses.  The MACM pointed out that accounts receivable represent on average about 40 per cent of the total assets within the balance sheet of most firms – so any improvement in the DSO would not only improve the creditworthiness of firms but would also release financial resources that could be directed to further investment.

The causes of late payment are particularly worrying as it appears that this is often the result of corporate bullying

The European Payment Report shows that small and medium sized enterprises (SME) are being squeezed by large corporation’s cash flow management across Europe ­ – with dire consequences.

One out of three SMEs says that not getting paid in time threatens the survival of the company and more than every third SME (34 per cent) say they could hire more employees if they were paid faster.

The causes of late payment are particularly worrying as it appears that this is often the result of corporate bullying.

The survey revealed that 45 per cent of SMEs accepted longer payment terms than they are were comfortable with and 35 per cent claim that the request to do so came from a large multinational client.

Almost two-thirds (63 per cent) claim that “intentional late payments” are among the main causes behind the delayed payments, suggesting that this problem could in large part be solved by new attitudes and guidelines.

“To put pressure on smaller companies to accept longer payment terms while creating instability, insecurity and fewer job opportunities cannot be in any business leaders’ long-term interest,” said Mikael Ericsson, CEO & president of Intrum Justitia, which issues the European Payment Report.

The Late Payment Directive was introduced three years ago but only 28 per cent of businesses are familiar with it and as little as 20 per cent of those that are familiar with it claim to have seen a positive effect from it.